Credit/Legal Issue!

[JDY]

A woman with whom I work recently discovered something on her credit report. It was the balance remaining after her insurance paid off her auto loan due to a total loss accident (8 months ago). The difference was about $1800.00. According to her credit report, it was "charged off" as "bad debt". She contacted the company to tell them this was the first she ever heard of it and now they are hounding her for the money. They said it will remain on her credit as "charged off/bad debt" until she pays it. Can they do this? Can they try to collect something after they have charged it off as bad debt?

Any Info I can give here will be grealt appreciated

Thanks!

 

[ByTheSea]

If she agreed to the terms of the settlement then she does owe the balance.

Sometimes you learn the hard way. I had a friend who shortly after graduating college "totalled" her new car. She was a teacher. Not 24 hours after the accident the insurance adjuster showed up and had her called out of her classroom to sign settlement papers. They "totaled" the vehicle, but they offered the depreciated value and not what she actually owed on the car. She only had it for a few months and the way they depreciated it, she still owed about $1000.00 on the car loan. So yes, after over a year of wrangling she owed the money which she paid off over the next year, and drove a "beater" car until the loan on the old one was paid off.

 

[JDY]

she agrees that she owed the balance. But she did not know about the balance until 8 months after the fact and after the account was charged off. And, had she never contacted them about it, they still wouldn't have contacted her. She's really mad!

 

[fkj2]

She'll be better off to get her credit report cleared.

 

[lil mermaid]

You should tell her that even if she does pay it off, it will still show up negatively on her credit report as a paid charge-off.

 

[Toby'sFriend]

Yes they can do it. I know of many people who have had something similar happen to them.

Most people do not realize that their auto insurance covers the value of their car and not the value of their auto loan. It's unfortunate that they never contacted her about the remaining balance, but they had no legal obligation to do so.

 

[Grog]

You should tell her that even if she does pay it off, it will still show up negatively on her credit report as a paid charge-off.

Unfortunately that is too true. A charge off-paid and a charge off-unpaid look about the same to anyone who reviews her credit report if she applies for credit at a later date. What she might want to do is try and make arrangments to get it paid off and see if she can work a deal to get it taken off her report afterwards. If the creditor will work with her and do this, tell her to make sure she gets it in writing.

 

[DocRafiki]

Yikes. I thought you had to get warnings before you were reported to a credit bureau.

 

[caitycaity]

"Yikes. I thought you had to get warnings before you were reported to a credit bureau."

where'd ya hear that one?

seriously though -- anything can be on your credit report and they don't have to tell you squat about it. that's why they say you should check your credit report frequently. i have had things that showed up on my credit report that weren't even mine. it was cleared up, but you have to check to know what they put on there. i was surprised that one late payment i made while abroad several years ago was there.