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Houston Debt Collectors Helping Combat Delinquency

When a debtor becomes severely delinquent on a debt, often at the point of six months without payment, the creditor may declare the debt to be a charge-off. After this, and upon our client’s request, Adams, London & Weiss LLC, will list the charge-off as such on the debtor’s credit bureau reports.

This is one of the worst possible items to have on a credit report and includes:

  • Relevant dates
  • The amount of the bad debt
  • Serious credit impairment
  • Future difficulty in obtaining credit

Profits & Losses

A charge-off is considered to be written off as uncollectable and the main reason for this is because it involves taxes at the corporate level. Every year, corporations file a profit and loss statement with the IRS and this P&L is also made available to federal and state regulators, as well as shareholders.

All of the year's bad debts, including business and individual personal guarantee charged-off accounts, are added together as an item in the loss section of the P&L statement, and they are deducted from the corporation's tax return, much like other business expenses. However, the debt is still considered legally valid; and the creditor can attempt to collect the full amount.

Consequences of a Charge-Off

As per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a credit report for up to seven years. The time limit is based on the date of the original delinquency, such as when the debtor missed a payment and never again became current, as it is not based on the last activity.

Furthermore, paying an old charged-off debt will not remove it from credit reports, as it will simply be listed as a paid charge-off, which is somewhat better, but it is still a seriously derogatory item.

In some instances, Adams, London & Weiss LLC may be able to negotiate with our clients to have the derogatory item completely removed from the credit reports in exchange for partial or full payment. This must be done directly with our agency, as our office, and not the creditor, reported the delinquent debt to the credit reporting agencies.

Contact our Houston debt collection agency online today or call us at (713) 489-1819 for an initial case evaluation.