Do I Include Charged Off Debt In Bankruptcy?

14 Aug Do I Include Charged Off Debt In Bankruptcy?

OK, what happened over the weekend?  Was there a news story about not including charged off debt in bankruptcy proceedings?  Yesterday, I had quite a few bankruptcy consultations and several individuals asked: Do I include charged off debt in bankruptcy?  This question usually comes up when someone has done a little research on the internet and does not understand the concept of charged off debt?  But to have it come up on several occasions in one day is a record.  The answer is Yes, of course you do.Charged off debt is nothing more than an accounting term.  It simply means that the creditor is taking the loss in this taxable year.  In other words, the creditor (usually a bank) is getting the debt off its books.  Although I am not an accountant, nor do I ever want to be one, I believe that banks are subject to routine audits and federal regulations which either require them or suggest very strongly that they get the bad debt off their books.  So, they will either sell, transfer or assign the bad debt to a collection agency.  This sale, transfer or assignment does not cancel the debt, nor does the sale, transfer or assignment make the debt non-collectible.  I have never read a state or federal opinion that came to that conclusion.

I have heard of this theory being floated on the internet, but then again like most information on the internet, you have to take it with a grain of salt.  I’m still waiting on my money from Nigeria.  Oh, and isn’t that the reason this blog was created, to dispel all of the bad information on the internet about bankruptcy.  Yea, that’s right.

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Carmen Dellutri, Esq.

Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.

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