It is a common misconception that once a debt has been charged off by a creditor that the creditor can no longer collect on the debt and the debt just kind of goes away. Unfortunately, that is not the case.
A charge off is actually merely an accounting procedure by the creditor, whether it is a bank, credit card lender, mortgage company, auto loan company, or any other type of creditor. The creditor has at that point decided the account is no longer an asset to the company.
Although the debt being charged off by the creditor is not a defense to having to pay the debt, there may be another defense. Whether the creditor or a collection company for the creditor can collect on the account depends on the statute of limitations. In Alabama the statute of limitations for most debts is either 3 years or 6 years, depending on the type of debt, from the last payment made on the debt. Be careful here, a payment of any type toward the debt could make a debt which has passed the statute of limitations or is about to pass the statute of limitations collectible again for another 3 or 6 years. Many times you may not hear anything about the debt for years, but out of the blue you are sued or begin receiving collection phone calls or letters regarding the debt. This often happens when a debt has been sold or transferred to different collection companies or debt buyers.
If you have been sued on a charged off debt or are being harassed by a creditor or a collection company, a bankruptcy may be your best way to stop it. There may also be other ways to defend against the debt or settle the debt. Please educate yourself and do not let yourself be bullied by these companies. Order my book by clicking here and/or contact an experienced bankruptcy lawyer immediately.
Why can’t I just put my house, car or other property in someone else’s name before I file for bankruptcy?Read Now
Because it would be a huge mistake. The bankruptcy court trustee has the power to avoid such transfers he or she feels were made with the intent to hinder, delay, or defraud creditors. Under the amended bankruptcy laws the trustee can “look back” at least two years, but may “look back” even longer in some circumstances. The trustees for the Northern District of Alabama routinely ask about real property transfers in the past ten years. Do not worry if you have legitimately (that is transferred to a third party and receipt of fair market value) sold a house or vehicle; however, be prepared to present the paperwork for the transaction.
The consequences of getting caught attempting a “fraudulent transfer” can be severe. The trustee’s avoidance of the transfer itself may cause a debtor many new legal problems; including, but not limited to, issues with the person(s) or entity to which the property was transferred and/or possible criminal charges. In addition such a transfer may result in a debtor not receiving a discharge in his or her bankruptcy which means no protection from creditors.
So, what do you do if you have too much equity in your real or personal property? You probably will be able to file a Chapter 13 Bankruptcy. In a Chapter 13 Bankruptcy in Alabama you may pay some or all of this equity into the bankruptcy court in affordable monthly payments over a period of time. While you may have to pay some money into the court, you will still avoid lawsuits, garnishments, repossessions, foreclosures, and have the other protections provided by the bankruptcy laws.
If you have any questions regarding this or Alabama Chapter 13 Bankruptcy filings or other bankruptcy or debt related issues please email me.
I am an attorney located in Cullman, AL. I practice extensively in the area of consumer bankruptcy law, that is, I file Chapter 7 and Chapter 13 bankruptcies for individuals. I handle cases all over North Alabama and have helped hundreds of clients through the bankruptcy process., I receive many referrals from former clients and their families and other attorneys. Why? Unlike other firms, I have a local office. If you are from out of town, we have the technology available to keep your traveling to a minimum. Also, unlike many firms, you will meet personally with an attorney, not a paralegal. An attorney will handle your case from start to finish. ,