Archive for November, 2011

What is a Charged-Off Debt?

Monday, November 21st, 2011

I was told by the debt collector that the bank charged off or wrote off my balance. Does this mean that I no longer owe this debt?  Can the bank or its debt collection agency continue to call me to pay this debt or sue me in court?

My response:

The terms “written off,” “charged off,” and “charged-off to bad debt” are used by accountants to comply with various accounting rules that banks and other financial institutions must follow.  The terms may be used interchangeably, as they have the same meaning and legal effect.  Accountants and bookkeepers of the creditor must consider a debt as “written off,” after the required period of time has expired, without receiving the required payment.  For banks, this period is typically six months of no payments. Other institutions have periods, sometimes longer and sometimes shorter, depending on the applicable rules.

My firm’s web site,, has an article entitled, “Understanding why you were sued,” which explains the steps of going from an credit card account which was in good standing to an account that the bank has written off as uncollectible to being sued in court in a debt collection lawsuit. Sometimes the bank hires a debt collection lawfirm to sue you in its own name. Other times, the bank sells the debt to another debt collector, which sues you in its name. Bad debts are often sold by large creditors as a “portfolio” to a large debt collection agency.

Either way, the credit card debt that was charged off is still legally enforceable in court by the current owner of the debt. One caveat would be that the debt collection lawsuit must be filed in a California court within the statute of limitations period that applies to the debt.  The statute of limitations is discussed in my blog posting called the “Don’t Pay a Dime Strategy,” at this link: Not One Dime Blog.

One other caveat is that the debt collector or creditor not have sent an IRS 1099-C for the balance of the debt. If this was received, give the tax form to your taxpreparer, but there are court cases stating that if the owner of a debt issues and files with IRS a Form 1099-C, the debt is no longer enforceable. Unless the 1099-C was issued in error and corrected, then the debt is thereafter unenforceable in court and perhaps collection calls would be illegal.

Robert Stempler

Contempt Against a Debtor Who Has Not Paid?

Monday, November 7th, 2011

Can the court hold me in contempt or put me in jail if I have not paid a money judgment on a credit card lawsuit?

My response:

There are a handful of stories circulating in the media and on the internet about debt collectors getting orders to hold a non-paying judgment debtor in contempt.  A California Superior court would only issue a contempt order, if the judgment debtor fails to obey an order of the court, after being properly notified of such order. For instance, after being served with an order to appear to appear for an examination of their finances, the court may request the sheriff to bring the person who failed to appear into court for contempt of the order to appear.

Some people confuse court documents and jargon, which results in missing important deadlines and mandatory court appearances.  My firm’s web site has PDFs of sample documents, so people can see what are typical documents used in Superior Court cases to collect a credit card debt, by some of the debt collection law firms in California.  Here’s the link to these documents directly: Sample Court Documents

There are a few other instances in which consumer run afoul of court rules that can add to the total amount due on a debt collection judgment, which is the reason the web site’s video on the “Six Options” tries to discourage people from trying to represent themselves, as there are ways to make matters worse in a case.

Robert Stempler, Attorney at Law

Founder of “” Dodges his Creditors: No Surprise Here

Thursday, November 3rd, 2011

Most of us have the common wisdom to know that information online is only as reliable as its source. For years, I’ve taken that common sense approach and applied it to the practice of helping consumers navigate away from bad legal decisions. I have warned people: if you want reliable legal information, the source should be a licensed attorney. I have also warned people against getting their legal advice from non-attorney neighbors, friends, coworkers, and the clerk at the courthouse.

Recently, the popular magazine, Mother Jones (online at, reported on Steven Katz (not an attorney), who prevailed in court over a debt collector who harassed him to pay an unpaid credit card debt. See article at:

According to the article, soon after that victory, Mr. Katz proclaimed himself a “credit terrorist” and started a crusade to help others fight the banks in court by founding and offering people hope with the slogan of: “Sue Your Creditor and Win!”). Mr. Katz also sells books and other materials through his web site that are supposed to empower people.

You’d think that Mr. Katz would be at an Occupy protest rally, handing out his materials and trying to get people to stop paying their credit card debts in an effort to “bring down the system.” You’d be wrong.

Mr. Katz, now saddled with at least $80,000 in credit card debts, has decided that he and his wife should to leave the country and work in China. Apparently, his aggressive tactics would not have done anything to stop the mountain of credit card debt from getting and enforcing money judgments against him.

Those of you who heeded common sense and ignored these non-lawyer charlatans, are not surprised. Certainly, such websites may be fun for a few minutes, but please do not waste your time and money trying out their nutty tactics, which Mr. Katz himself has proven are ineffective and a reason to flee the country.

Robert Stempler, Attorney at Law