Your second-mortgage debt hasn't been canceled or forgiven. A "charge off" is an accounting term that means the creditor no longer considers the money you owe as a source of profit but instead counts it as a loss. A charged-off loan—unlike forgiven debt—is still considered an obligation that you must pay.
A mortgage charge off on a credit report will remain a lien on the title to a home. ... However, in some cases, particularly if it is a second mortgage, your loan may be sold to a third-party collection agency.
Once the creditor writes off your debt, they either sell or transfer your delinquent account to a collection agency or a debt buyer.
Charge-offs tend to be worse than collections from a credit repair standpoint for one simple reason. You generally have far less negotiating power when it comes to getting them removed. A charge-off occurs when you fail to make the payments on a debt for a prolonged amount of time and the creditor gives up.
How long will the charge-off stay on credit reports? Similar to late payments and other information on your credit reports that's considered negative, a charged-off account will remain on credit reports up to seven years from the date of the first missed or late payment on the charged-off account.
The charge off does not remove the mortgage debt; it only puts it into a different classification. The lender still retains a claim against the house, the ability to foreclosure on the property or demand payment in the case of a bankruptcy.
A charge-off means the creditor has written off your account as a loss and closed it to future charges. ... You may be able to negotiate for the removal of a charge-off from your credit with your creditor or debt collector.
When you don't make payments on a second mortgage, second mortgage lenders can foreclose on your property. But because they're “second” in line to get paid, they could get nothing from the sale. If this happens, depending on state law, these lenders can sue you for repayment.
Your second lender may voluntarily forgive your second mortgage, including a home equity line of credit or home equity loan. ... Even if your lender lets you off the hook for the second mortgage, you may face an increased tax liability because the IRS treats certain cancelled mortgages as income.
If your mortgage is not underwater or your second mortgage is partially secured, and you stop paying your second mortgage, the holder of the second mortgage will likely foreclose because it stands to recover all or part of the money it loaned to you from the foreclosure.
Legal Consequences. A foreclosure is bad. A charge-off following the foreclosure is worse. A lawsuit, however, can be catastrophic for your financial well-being.
Yes, you can be sued for a debt that has been charged off. The term “charge off” means that the original creditor has given up on being repaid according to the original terms of the loan.
Once the account has been charged off, the creditor turns the account over to a collection agency, and then they attempt to collect the past due amount. After seven years from the point the account became delinquent, most charge-offs are removed from your credit history.
A 609 letter is a credit repair method that requests credit bureaus to remove erroneous negative entries from your credit report. It's named after section 609 of the Fair Credit Reporting Act (FCRA), a federal law that protects consumers from unfair credit and collection practices.
Keep Accounts Current
The best way to rebuild your credit after a mistake like a collection or a charge-off is to get some positive information on your credit report. If you still have active credit cards or loans, continue paying them on time.
A charged-off account means the creditor has written off the debt and is no longer to collect. ... However, buying or refinancing a home with either collections or charge offs is still possible. Actually, FHA loans are very lenient in these cases.
A charge-off stays on your credit report for seven years after the date the account in question first went delinquent. (If the charge-off first appears after six months of delinquency, it will remain on your credit report for six and a half years.)
Foreclosures, like other negative marks, won't be on your credit report forever. In fact, a foreclosure must be removed seven years after the date of the first late payment that led to its default. In credit reporting terms, this is called the date of first delinquency, or DoFD.
Like your lawyer told you, negative information such as foreclosures and charge-off accounts remain on your credit reports for seven years from the date of the first missed payment. After this cycle is completed, they will automatically fall off.
Once an account has been charged off, it cannot be reopened.
If after investigating you find that the charge-off on your reports is legitimate, it's important to take action and pay it off. It may be tempting to not pay a charge-off, since your lender has likely stopped trying to collect on the account.
Can you have a 700 credit score with collections? - Quora. Yes, you can have. I know one of my client who was not even in position to pay all his EMIs on time & his Credit score was less than 550 a year back & now his latest score is 719.