Having a "charged off debt" does not mean you no longer owe the debt. Instead, it refers to the fact that the creditor who originally issued the credit -- whomever it was that you borrowed from -- has decided that the debt is uncollectable and has written off the debt.
This doesn't mean you have received some gracious "loan forgiveness." No, it means that this creditor believes he cannot collect the debt. This will not prevent him from selling the debt to a collection agency which will shift into high gear to find you and do its best to convince you to pay them to settle this outstanding debt.
It is, indeed, the contact from collection agencies, then, which sets most people into motion to conduct the Internet search to understand their rights when one of their debts has been thus charged off.
A competent attorney can help guide you along the route of restoring this situation.
If you want to understand what happens next, you will need a little background.
The last payment made on a debt starts the clock on when it needs to get collected. Your state's SOL -- Statute Of Limitations -- generally starts ticking at this point. In many states the time a debt is considered "enforceable" is five years; in some its shorter, in many it's longer. Once the debt has gotten past this point of no return, then courts essentially feel the creditor didn't care to collect after all, and has forfeited his or her right to sue and collect damages.
Some debts, such as student loans, are not so lucky. They are exempt from Statute of Limitations.
If contacted by a collection agency at some point and you agree verbally or in writing that you owe the debt they are attempting to collect, that you want to "get this taken care of," or you send in even a token payment, this is sweet music to the collection agent's ears. You effectively waive all defense that your attorney can raise to dispute the debt validation process, and -- worse yet -- that simple "good faith" effort on your part re-starts the SOL again.
Phone calls or letters from collection agencies or debt attorney offices should best be handled gingerly and with great forethought. As mentioned earlier, consulting a good lawyer is your best first defense.
Standard procedure usually follows this path: request validation of the debt without acknowledging that you owe the debt. If the debt is clearly not yours, perhaps a mix-up in names or similar misidentification, then disputing the debt is just. No agreement to pay off the debt or make a small down payment toward the debt should be made at this point until proof positive evidence that this debt is valid has been provided under terms on the law.
Additionally, if you know for certain that the debt falls outside the timeframe of the SOL in your state -- again, check with your trusted attorney to ensure this is so -- then you have the legal right to make this claim to a judge both in civil and small claims court.
Alas, if it is determined that your debt has not outlived the SOL in your state, and the collection agency produces proof that the debt is valid, a judgment could be -- and likely will be -- obtained on you, and your hand will be forced to repay the debt. Unfortunately, you'll have little room to negotiate or settle at this point. The time to do that was when the debt was past due or getting close to being written off.
You'll have to be aware that collection agencies often attempt to re-age debts, and you'll need to have a good strategy to prevent them from re-aging your debts. This effectively re-starts the clock on the SOL, and by allowing them to do this, "zombie debts" are often passed from one collection agency to another if those old debts remain on your credit report, noted as valid and collectible, and the last date of payment has been altered or erroneously reported.
The good news if that when a debt which is not past the SOL where you live, there is a renewed willingness for creditors to negotiate in good faith to settle this matter. If you communicate honestly and seek out goodwill, plus you follow through on what you promise you're going to do (you call when you say you'll call back, you mail in documents that you say you're going to mail), you may be able to work out an official agreement which outlines how this matter can be resolved, keeping it off your credit report, and beginning the process of getting rid of the debt for good and restoring good credit ratings in the process.
Experts in the field warn that this aforementioned agreement at its core needs to document your account with the creditor has been paid in full and settled once and for all. Never lose a copy of this agreement, either. You may need it to prove your case someday when applying for a home mortgage or an auto loan. You want to have the proof within short reach to prove this debt has been completely satisfied.
No, it's not that having a "charged off debt" means you're now regarded as an irresponsible person who doesn't pay off debts, and it does not mean that you are free and clear of the debt. All it means is that the creditor who originally issued you credit decided money you owed was now uncollectible, wrote off the debt, dinged your credit report as defacto revenge, and turned it over to a collection agency to salvage pennies on the dollar to get the account off the books. And, as detailed in this article, when the collection telephone calls start ringing, it might be a good idea to know how to fight harassment from bill collectors.
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