- Charged Off: “Charged Off” is an accounting term used by credit card companies to categorize accounts that they no longer consider as collectible assets. When an account is “charged off,” it means the credit card company has determined that the debtor is unlikely to repay the debt, and they have decided to remove the debt from their books as a loss. This typically occurs when the account becomes severely delinquent, often after a period of 180 days of non-payment.
- Despite the term “charged off,” it’s essential to understand that this doesn’t mean the debt is forgiven or that the debtor is no longer obligated to repay it. The credit card company may continue to pursue debt collection or sell the debt to a third-party debt collector, who will attempt to collect the amount owed.
- Written Off: “Written Off” is a term used by credit card companies to signify that they have closed the delinquent account and moved it from their active accounts receivable. Writing off an account doesn’t mean the debt is forgiven; it merely indicates that the credit card company has given up on collecting the debt through their internal efforts.
Similar to “charged off,” the debt may still be sold to a debt collector, who will continue to try to recover the outstanding balance. Now, let’s discuss the aspect of hardship programs and payment deferment programs required by law that credit card companies must abide by:
- Hardship Programs: Hardship programs are initiatives offered by credit card companies to help customers facing financial difficulties and struggling to make their debt payments. These programs can vary depending on the company’s policies, but they may include options such as reduced interest rates, lower monthly payments, or temporary suspension of payments for a specified period.
- While there isn’t a specific federal law that mandates hardship programs for credit card companies, there have been regulations and guidelines introduced by financial regulators like the Consumer Financial Protection Bureau (CFPB). These regulations encourage financial institutions to work with consumers in distress and consider their ability to pay before resorting to aggressive collection actions.
3. Payment Deferment Programs: During times of economic hardship or crises, some countries’ governments or regulatory bodies may enact temporary measures that require financial institutions, including credit card companies, to provide payment deferment programs. These programs allow borrowers to defer their debt payments for a specific period without incurring late fees or penalties.
Such programs are usually introduced to alleviate financial burdens on consumers during difficult times and prevent mass defaults or bankruptcies. However, the specifics of these programs can vary widely from one situation to another and from one jurisdiction to another. Overall, while “Charged Off” and “Written Off” accounts represent the credit card company’s handling of delinquent debt, hardship programs and payment deferment programs aim to provide temporary relief to consumers experiencing financial hardships and ensure fair and reasonable debt collection practices. The availability and terms of these programs can be influenced by various factors, including government regulations, industry practices, and the specific policies of each credit card company.
Please note that this list is not exhaustive, and the renewal periods may have changed since my last knowledge update in September 2021. It’s always best to consult the specific state statutes or seek legal advice for the most accurate and up-to-date information regarding judgment renewal requirements in a particular state.
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