Business & Finance Credit

What Is a Charge-Off of a Mortgage?

    Post Foreclosure

    • If you are unable to pay your mortgage, the bank will eventually take your house in foreclosure. The process varies depending on the state where you live, but ultimately, the bank sells your home for the highest amount it they can get for it. Usually, the selling price is not enough to clear the complete mortgage balance, and this deficiency is still owed by the homeowner. After some time of trying to collect this balance, the bank may charge this balance off its books to clean up balances, but it may still pursue you for payment.

    Short Sale

    • When some buyers realize they cannot pay for their home and they owe more on the home than it is worth, they decide to work with the bank to sell the home before the bank forecloses. This situation is called a short sale and can work out well for all parties. The bank usually recovers more money with a short sale than it would with a foreclosure, and often the bank forgives the deficiency portion of the loan balance. The bank still needs to charge this amount off as a loss for accounting purposes.

    Bankruptcy

    • A bankruptcy allows a debtor to discharge, or eliminate all of his eligible debt. Any deficiency amount that was charged off by the lender qualifies as eligible debt. While the bank still charged off the debt for accounting purposes, the bankruptcy discharge voids any responsibility the borrower has to repay this amount.

    Pursuit of Charged-Off Amount

    • When a bank has charged off mortgage debt, it often will use a third-party collector to collect the debt. The bank also may sell the charged-off account for pennies on the dollar to a junk debt buyer, who will try to collect. Some debt buyers are extremely aggressive with their collections techniques and will often sue to get a judgement and garnishee wages. However, they often will settle debt for significantly less than the original amount.

SHARE
RELATED POSTS on "Business & Finance"
What Do You Need to Know About Credit Cards and Risk-Based Pricing?
What Do You Need to Know About Credit Cards and Risk-Based Pricing?
Firestone Credit Card Overview
Firestone Credit Card Overview
Statute of Limitations for Collecting a Credit Card Debt in the State of Ohio
Statute of Limitations for Collecting a Credit Card Debt in the State of Ohio
Where to Purchase Prepaid Credit Cards - Online and In-store Outlets
Where to Purchase Prepaid Credit Cards - Online and In-store Outlets
Why & How Do I Raise My Credit Score?
Why & How Do I Raise My Credit Score?
How to Reopen an Account that the Credit Card Company Closed
How to Reopen an Account that the Credit Card Company Closed
Benefit Of Clean Credit Report
Benefit Of Clean Credit Report
Is a Deceased Person's Estate Responsible for Back Taxes?
Is a Deceased Person's Estate Responsible for Back Taxes?
How to Save Money on Your Credit Cards
How to Save Money on Your Credit Cards
Credit Card Security Compliance
Credit Card Security Compliance
Personal Credit Report - Credit Reporting Data From Many Sources
Personal Credit Report - Credit Reporting Data From Many Sources
How Credit Counseling Helps You in Fixing Debts
How Credit Counseling Helps You in Fixing Debts
Trading Futures Using Price Action
Trading Futures Using Price Action
Using Credit Cards Efficiently
Using Credit Cards Efficiently
What Is a Nine-Month Interest-Free Credit Card Offer?
What Is a Nine-Month Interest-Free Credit Card Offer?
Raising Your Credit Score For Free
Raising Your Credit Score For Free
Been Bankrupt? How It Can Hurt Your Credit Score
Been Bankrupt? How It Can Hurt Your Credit Score
Debt Settlement Tips - How to Get Creditors to Accept Favorable Debt Settlement Deals
Debt Settlement Tips - How to Get Creditors to Accept Favorable Debt Settlement Deals
Some Thoughts on Credit Card Payment Services
Some Thoughts on Credit Card Payment Services
Can You Really Improve Your Credit Score in 24 Hours?
Can You Really Improve Your Credit Score in 24 Hours?

Leave Your Reply

*