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  1. #1
    Join Date
    May 2010
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    20

    Default Charge-Offs

    State of California:

    My sister is currently trying to get a home loan, and out of nowhere the underwriter is balking about a car she owned with her ex-husband.

    My sister and her ex-husband divorced in 2005, and in November 2005, he filed Ch. 11 bankruptcy. They surrendered the vehicle and she received a notice that they sold it at auction for $9000, but that was the absolute last thing she heard on the vehicle.

    We assumed since he filed for BK that the car was discharged, but the loan agent pulled up the BK and apparently the car was not discharged with everything else. It shows that the vehicle was "Charged off" in 2005, but now the collection agency that sold the car is demanding she pay $12000 which was supposedly what was left on the loan.

    The odd thing however, is that in 5 years since then there have been no collection attempts. There have been no calls, no letters, and none of the family who were listed as references (such as myself) have ever been contacted about collecting this debt. Also, there was another vehicle and a quad that were sold off in the same manner, listed as "Charge off", but given a $0 balance.

    My sister wants to go ahead and pay the $12000, but this sounds fishy to me. If youre even a few days late on paying your cellphone bill, they blitzkreig you with text messages and phone calls, so its hard to believe a collection agency would have a discrepancy of $12000 and never as much as call my sister.

    I mean, in the last 5 years she has purchased 4 new vehicles and a home, and this has never shown up until now. If she owed $12000 on a vehicle from 2005, wouldnt that come up when she was getting a loan on a new car or the one home she already owns?!

    Could this possibly be a scam??! And how would we go about investigating if this debt really does exist?

    Thank you in advance for your help!

  2. #2
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Charge-Offs

    Could this possibly be a scam??!
    anything is possible but:

    he filed Ch. 11 bankruptcy
    that would not relieve her of any joint debts, just him. If the vehicle loan was in both names, she would still be liable.

    It shows that the vehicle was "Charged off" in 2005,
    that term has nothing to do with the debtor owing the debt. It is merely used to refer to how the creditor has accounted for the money for tax purposes.

    If youre even a few days late on paying your cellphone bill, they blitzkreig you with text messages and phone calls, so its hard to believe a collection agency would have a discrepancy of $12000 and never as much as call my sister.
    maybe they contacted the ex and he convinced them to go away? There are a lot of things that can happen especially considering what you have posted here.

    . If she owed $12000 on a vehicle from 2005, wouldnt that come up when she was getting a loan on a new car or the one home she already owns?!
    You would think but there is no requirement to report a debt on your credit report. If the original creditor basically gave up, it might simply have not been updated on her credit report. Due to all the activity with junk debt buyers, they may have purchased the debt and reported it in the interim.

  3. #3
    Join Date
    May 2010
    Posts
    20

    Default Re: Charge-Offs

    Hmmmm, I know there was some sort of agreement in their divorce about who owed what on the different pieces of property, but its not my divorce, so I dont know for sure.

    As for checking up on this, does anyone have any suggestions of who we should contact? We contacted the the debt collector to try to get more info, but they only gave us a phone number to check with, and the phone number is to a impound/junkyard!

  4. #4
    Join Date
    Jan 2006
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    38,867

    Default Re: Charge-Offs

    LilRascal;418991]Hmmmm, I know there was some sort of agreement in their divorce about who owed what on the different pieces of property, but its not my divorce, so I dont know for sure.
    . The courts will order that one party or the other is liable for some debt in a divorce but it does not actually change who is liable to the creditor. The account with the creditor does not change due to what the divorce demands.

    As for checking up on this, does anyone have any suggestions of who we should contact? We contacted the the debt collector to try to get more info, but they only gave us a phone number to check with, and the phone number is to a impound/junkyard!
    to start with, I would contact the original creditor to see what the remaining balance of the loan was. Not sure why they would refer you to the tow lot but I presume it was the company that towed the vehicle for the repo. They would have nothing to do with the underlying debt due to the loan.

  5. #5
    Join Date
    May 2010
    Posts
    20

    Default Re: Charge-Offs

    Thanks for the advice jk! I really appreciate it, and I will talk to my sister tonight about it!

  6. #6
    Join Date
    May 2010
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    20

    Default Re: Charge-Offs

    Just a few more questions...

    My sister was responsible for that vehicle in the divorce, however looking at the ex-husband's BK, he listed it as his asset, and it shows a "discharged"....

    We called the company who held the original loan, since there was no paperwork she has regarding that vehicle after it was repo'd in 2005, and we think they still have the account. I know that sounds strange, but the loan holder was very evasive and refused to give details on the account, eventhough my sister is the account holder.

    They are trying to get her to pay the $12000, but they will not give her proof that the account is still unresolved. When we told them the vehicle is showing on the ex-husband's Ch. 7 BK (I was wrong last time on what type of BK!)as discharged, they claim they still have the loan as delinquint. Actually, they claim they cant find the original loan, they can just see in the computer that there is money still owed by her for the vehicle.

    This sounds incredibly sketchy to me! If the loan still truly is in default, shouldnt they be able to produce proof that the account still has a balance? How can they not be able to find the original loan, but insist that there is still a balance due. I thought a debt that was discharged from a BK was gone...

  7. #7
    Join Date
    Jan 2006
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    38,867

    Default Re: Charge-Offs

    My sister was responsible for that vehicle in the divorce, however looking at the ex-husband's BK, he listed it as his asset, and it shows a "discharged"...
    .if they were joint on the loan, that means HIS debt was discharged but hers wouldn't be.

    We called the company who held the original loan, since there was no paperwork she has regarding that vehicle after it was repo'd in 2005, and we think they still have the account. I know that sounds strange, but the loan holder was very evasive and refused to give details on the account, eventhough my sister is the account holder.
    yes. 5 years ago and they don't have paperwork. That does seem a bit sketchy. Maybe move further up into the company hierarchy.
    I thought a debt that was discharged from a BK was gone...
    yes, it is but only for the person filing BK. I presume they were joint borrowers which means the husband's debt was discharged yet your sisters remains.

    Before you get all of the activity started, you say she really is willing to pay the true debt, yes? If not, sometimes it's best to not stir the pot. If she actually wants to pay the debt, which is great, but it is going to take some work and since she is in the midst of her home loan, it may not be taken care of correctly in the time frame she has.

    I would also suggest; whatever creditor she ends up owing, she should try to negotiate a "pay for delete" where the debtor will remove the line on her CR if she pays in full.

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