What to do about paying a charge off?

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What to do about paying a charge off?

I got a letter from the recovery department of a bank. They want a payment. However, I have been making payments every month for the past 8 months. They call and now want full payment. I can’t pay the whole loan off which is why I have been making the monthly payments. 

Asked on October 11, 2010 under Bankruptcy Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A creditor is not obligated to accept anything less than payment in full when it is due. Even if you have been making payments, assuming that you are in default--that is, that you have paid late or not everything due--the bank can take collections actions or even sue you. While banks will often try to work with debtors who show good faith, if the proposed payment plan or schedule is too slow--i.e. it will take unreaonably long to pay off the full amount--they will often proceed to legal action, which is indeed their right; again, a creditor does not need to accept partial payments. Whatever you have paid to date has to be credited against your account or the amount due, so they payments you've made will help you; but they can go ahead and take action if they choose for the balance.


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