What to do if I have a bank loan that was charged off?

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What to do if I have a bank loan that was charged off?

I do not know where they sent my loan, meaning which collections agencey, or in fact what they’ve done with it. I am extremely embarrassed and would like to know how to make this right. Do I have to actually speak to someone at the bank or can I just send them payments?

Asked on December 5, 2012 under Bankruptcy Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A bank loan that is charged off is written off as uncollectible--the bank has given up on trying to recover it. It can take a tax loss for the value of the loan, and you will have a bad debt or default on your credit history, lowering your credit score significantly. No one can try to collect the money from you if it was actually charged off.

If it was not charged off as entirely uncollectible, but was rather sold to a collection agency or other person at a discount, the bank can write off the difference between the face value of the loan and the amount they received, and the collections agency, etc. who bought it can sue you for the entire amount of the loan.

The bank should be able to tell you whether they charged the loan off or sold it; and if they sold it, to who.


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