If my second mortgage was “charged off” after my Chapter 7 discharge, now what?

UPDATED: Feb 22, 2012

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If my second mortgage was “charged off” after my Chapter 7 discharge, now what?

I had a discharge 21 months ago. My house was not reaffirmed. The first is goingdeed in lieu now; the second was listed as discharged in bankruptcy. The holder of the second sold it and the company they sold it to just listed it as “charged off”. What does that mean? How do you charge off something discharged? Another hit on my credit report besides the “discharge”? So is the lien for the second gone?

Asked on February 22, 2012 under Bankruptcy Law, New Jersey


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The loan may be discharged by the bankruptcy but it may need to be considered charged off by your lender in order to square its accounting records. Now if it sold the debt to the collection agency, then your affirmative defense is you do not owe a debt becase it was discharged. If you do not wish to see it as charged off, please understand disputing it with a credit reporting agency and having it changed to discharged in bankruptcy may be worse for your records. You get a free credit report from each of the three credit reporting agencies every year. Contact them, request the free report and see what you can do to change or dispute the label on this debt.

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