‘Charged off’ is most misunderstood phrase in debt collection

Jul 9 2012 - 12:01am



"Final Notice!" is emblazoned in red on the front of the bill. This is the second or third bill you have received telling you that this is the "final" notice -- at least final until you receive the next one.

have to wonder about the makers of the self-inking "Final Notice" stamp, which, according to Amazon, has "Thousands of quality impressions before re-inking is necessary" and " is ideal for a variety of uses and is a must have for any busy office or mailroom." Why do you need thousands of impressions for your final notice stamp?

Despite the questionable use of the English language, I can understand what the debt collector is trying to accomplish with the "Final Notice" stamp -- create a sense of urgency to cause action.

Another similar use of the language in debt collection letters goes something like this: "You must pay by the end of the month or your account will be charged-off."

"Charged off" is probably the most misunderstood phrase in the land of debt collection. It is a great example of the golden rule gone awry. The collector sees "charged off" as a bad thing -- it means the debt is determined as noncollectable and will be written off as a loss and sold to another collector.

So they put in the letter pay or else this bad thing will happen. Yet most debtors mistakenly see "charged off" as a good thing. Charged off? You mean, I won't owe you this any more?

Utah does require collection agencies to be licensed and bonded. The principal protection for consumers comes from the federal Fair Debt Collection Practices Act (FDCPA).

The FDCPA has some common sense provisions, such as a debt collector cannot ask you for more money than you owe, threaten or use harassing language, make false statements, call early in the morning or late at night and threaten violence.

The debt collector cannot call your neighbors to tell them you owe money. The debt collector can't call you at work after being told you cannot take calls at work. Every bill or communication from a debt collector (even those stamped "Final Notice") must contain the language "We are a debt collector. This is an attempt to collect a debt. Any information obtained will be used for those purposes."

For the best explanation on the FDCPA, go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm. The FDCPA protections only apply to third-party collectors and consumer debt.

So after all the calls and letters, what happens on a debt that isn't paid? Our courts are debt collectors. Most cases filed are probably for that purpose.

For fiscal year 2011, there were 306,014 cases filed in the state district courts, including all the criminal cases, divorces, probates, personal injury cases and debt collection. Some 191,470 of those cases are debt or lien collection cases, so nearly two -thirds of all cases filed in the district courts in Utah are about collecting money.

The state court system is where the final notices are actually sent. So if you receive a "Final Notice," the only way to ensure that it is, in fact, the final notice is to simply pay it.

E. Kent Winward is an Ogden attorney. He can be reached at

801-392-8200 or creditcorrection@gmail.com.

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