Sacramento bankruptcy: is written-off credit card debt still collectable?
Yes. Credit card debt written off by the bank does not mean the debt is done. Credit card debt that is written off is a way the credit card company can remove the debt they are owed as an asset from their books. It doesn’t mean you no longer owe that debt. You do.
Typically debt that credit card companies write off is then sold to collection companies at a fraction of the dollar amount owed. That collection company can then collect that debt from you. Collection companies are often more aggressive in their efforts to collect the debt than the originating credit card company you initially owed the debt. They are not lenders, they are collectors.
Even if you avoid collection efforts from collection companies, the credit card company that wrote off the debt can still do you damage. As discussed in earlier posts, the debt credit card companies write off can be considered forgiven. Though forgiven debt can still be collected upon by another company or collector, the credit card company can send you a 1099 for the forgiven debt they wrote off. This means you must pay taxes on the amount of that forgiven debt.
Bankruptcy is a cleaner fix. Debt that is discharged in a bankruptcy is eliminated forever. No one else can collect on that debt and the amount discharged is not considered income for tax purposes.