Q: My debt has been charged off. Do I still owe the debt?
A: You still owe the charged-off debt. Many people mistakenly believe a creditor does not want to collect a charged-off account. Wrong-o! A charge off is merely a bookkeeping entry. It does not affect your obligation to pay. When it becomes apparent to your creditor that you are not paying and are not going to pay any time soon, then the creditor must “charge off” the loan. Usually that happens 6 months after you default-you stop making payments on that debt. The creditor stops posting interest or late fees to the account when the loan becomes nonperforming and the creditor is not getting paid.
All defaulted debts are charged-off, then are sent to either a collection agency or sold to a debt buyer. Sometimes these debts are sold several times to investors who will try to collect the account years later. If you have charged off debts on your credit report you should include those debts in your bankruptcy case.