Debt charged off but not sold off – What to do

5 Answers

That is a great debt validation template.

Question: Is there any way to resolve the charge-off since the original creditor sold-off your debt to a collection agency. How can we get that removed from the credit reporting agencies? Is there a way?

-Debt collectors can go after you even if original debtor charges off balance. 

-Yes, they are required to show you statements, but only if you request them in a debt validation letter.

-Don't assume all debt collectors work for creditors.  They are independant companies.  Large creditors have their own collections and usually don't hire out.  Some are hired and if they collect anything and give it to the creditor, the creditor must declare it as income.  Once you default and the balance is charged off, they will not change it even if you pay a debt collector.  How a debt collector keeps his books is of no concern to you, as you will not benefit.


But let's start from the beginning.  A debt collector will begin calling you to get you to agree to pay the full amount of the debt.  You respond by telling them you need a letter from them, do not agree to pay and do not refuse to pay, essentially you're going to speak with them, but not actually say anything.  They will try to bait you, with, "Are you refusing to pay?"  Of course, this is being recorded and if you end up in court, a refusal will hurt you.  Within 5 days, they are required to mail you a letter saying how they are collecting on the debt.  This is the best part.  Look for any phrase like, "this account was placed in our office for collection."  Notice the word "placed,"  it means nothing.  You have a great opportunity here to send them off into the sunset without your money.  Even though I believe all debt collectors are scum bags who can't find a real job and prey on people who've fallen on hard times, they are quite savvy and will not claim ownership of a debt unless they actually bought it.  Even so, make them prove they bought it and have a legitimate right to collect. 

Respond in writing within 30 days of receiving their letter.  Your debt validation letter will dispute their claim to your debt.  Once you send the letter, they cannot contact you until they respond in writing.  The law however, puts no time restraint on them, so it's a waiting game after that. 

Case in point, I had a credit card that I defaulted on, the balance was charged off (a tax write off for them) and then sold 2 years later to a debt collector.  This debt collector actually claimed they bought the debt, which they did.  I sent my debt validation letter and haven't heard from them in 5 months.  They can't comply because even though they bought the debt, they have no proof they bought it.  FYI, debt collection is a type of investment.  Some companies purchase blocks of debt from banks etc, but never get specific information about the accounts they purchased.  Hence, they can't prove they bought the debt.  Furthermore, any documents they get probably show what they actually paid, which is pennies on the dollar.

I've dealt with many debt collectors in the past 3 years and have yet to come across a legitimate one.  Below is my debt validation letter.  I got it off the internet, but tweaked a little based on my research and experience.



To Whom It May Concern:

This letter is being sent to you in response to a letter from you dated June 20, 2011. Be advised that this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.

This is NOT a request for verification or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.

-What the money you say I owe is for

-Explain and show me how you calculated what you say I owe

-Provide me with copies of any papers that show I agreed to pay what you say I owe

-Identify the original creditor

-Prove the Statute of Limitations has not expired on this account

-Show me that you are licensed to collect in my state

-Provide me with your license numbers and Registered Agent

-Legal proof that Chase Home Equity owns the debt/or has been assigned the debt.

-Complete payment history, starting with the original creditor. (I need to have proof of my payment history with original Creditor, what the amount of the debt was when the creditor assigned the debt to your company, and what fees/interest has been tacked on to this debt and how you/they determined these fees.) This requirement was established by the case Fields v. Wilber Law Firm, Donald L. Wilber and Kenneth Wilber, USCA-02-C-0072, 7th Circuit Court, Sept 2004..

-Copy of the original signed loan agreement or credit card application. (My contract with the original creditor establishing the debt between us.)

If your offices are able to provide the proper documentation as requested in the following Declaration, I will require at least 60 days investigating this information and during such time all collection activity must cease and desist.

If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.

I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. All future communications with me MUST be done in writing and sent to the address noted in this letter by USPS.

It would be advisable that you assure that your records are in order. This is an attempt to correct your records; any information obtained shall be used for that purpose.



  • Can the finance company (through a debt collector) still go after you? Oh yeah. That is why they hire them. Collectors will dunn for the balance whereas law firms will sue you on behalf of the client.
  • Is the debt collector required to provide you with statements (on behalf of the finance company) if you start making payments to the debt collector? 

    A collection agency is not required to send you any monthly statements. They do not function as a billing agency or servicer.

  • How is the charged off amount recorded on the books of the finance company? And how does that recording change if I start making payments to the debt collector? You can talk in terms of debits/credits or \"X account increases...Y account decreases.\": Really no different than before. It is just in there charge offs. It really is irrelevant to the consumer.Payments still go to interest first, principal second.
How to Deal with Illegal Loans..OhioGal's Primer
PDL's are ILLEGAL in the following states...
OH AND NH have very restrictive low cost interest rate laws.

SOL for all states

Thanks Anna
I\'m not quite sure I understand you response to my post.

You said:The finance company may have their own collections department who can contact you for the payments.

Yes, I\'m aware of this. However, as I indicated in my post, I was referring to when a finance company \"hires\" a lawyer of debt collector.

You said: You can request the debt collector to provide you with statements if you\'re paying off the debt.

I was asking what the debt collector is \"required\" to do, not what I can do.

You said: As far as your third query is concerned, it will depend upon the debt collector as to how he will report it in his own books.

I was asking how it would be recorded on the finance company\'s books, not the debt collector\'s. If we\'re talking debits/credits, I\'m guessing the finance company would initially credit cash (decrease) and debit notes receivables (increase). However, I\'m not sure what happens after the charge off occurs.

It is possible that your original creditor charges off the debt but does not sell it off to a third party collection agency. The finance company may have their own collections department who can contact you for the payments. You can request the debt collector to provide you with statements if you\'re paying off the debt. Once you pay it off in full, you may even ask for a letter mentioning the same.

As far as your third query is concerned, it will depend upon the debt collector as to how he will report it in his own books.

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