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Charge off loan, still want intrest


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#1 okipapa1

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Posted 19 November 2012 - 09:07 PM

In 2010 I filed for chapter 13 which later converted to chapter 7 (resident of California). I had a car loan with my Credit Union which I reaffirmed/continued to pay so I could keep my vehicle and the loan was "charged off". As of right now, I only have one month left to pay the loan off, however, they tell me that I need to pay interest which now totals $1,898. My understanding is that if the loan was charged off, the credit union cannot charge you for interest. All my payment receipts for the last 2 years show that all of the money we paid each month went to principal only, no interest is shown on any of the receipts If interest was due, why wouldn't the break down be shown on the receipt(ex: $300.00 payment, $30.00 interest and $270.00 principal)? My understanding is that when a credit union "charges off" a loan, they are covered by insurance for the "loss", and therefore would not ask for interest.
Please let us know if this is legal and if we need to consult a lawyer. Thank you.

#2 doucar

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Posted 20 November 2012 - 12:07 AM

Charge off is an accounting term that allows the creditor to write the loan off on their taxes. Should they collect the loan, they then have to add it back to their taxable income and pay the taxes on it. It has nothing to do with your obligation to repay the loan in full according to the original terms, or according to any modification of the terms approved by the bankruptcy court when you reaffirmed the debt.

Bottom line, you owe the interest.

#3 adjusterjack

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Posted 20 November 2012 - 08:06 AM

In 2010 I filed for chapter 13 which later converted to chapter 7 (resident of California). I had a car loan with my Credit Union which I reaffirmed/continued to pay


Which is it, reaffirmed or continued to pay? They are two completely different concepts. Reaffirmation generally has to be approved by the bankruptcy trustee. Continue to pay is not necessarily reaffirmation. The two might have different consequences.


My understanding is that if the loan was charged off, the credit union cannot charge you for interest.


Have no idea where you got that "understanding" but it's wrong.


All my payment receipts for the last 2 years show that all of the money we paid each month went to principal only, no interest is shown on any of the receipts


You mean you actually got a receipt back from the lender that had "principal only" written on it?

If interest was due, why wouldn't the break down be shown on the receipt(ex: $300.00 payment, $30.00 interest and $270.00 principal)?


Because it's not required that it be shown.

Apparently you erroneously believed that all of your payments were being applied to fully amortize the loan. Should be easy enough to figure out with the following amortization calculator. Put in the amount you owed after your bankruptcy when you first started to continue to make payments, put in the interest rate, put in the amount you paid per month, and the number of payments in a year. That'll give you a schedule of how the principal and interest should have been allocated and the balance you would owe today.

http://www.bretwhiss...n/amortize.html


My understanding is that when a credit union "charges off" a loan, they are covered by insurance for the "loss", and therefore would not ask for interest.
.


Yeah, that's also wrong.

Bottom line, you don't need a lawyer, you just need to pay the balance due.

Besides, a lawyer would cost you a lot more than what's owed.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#4 Guest_FindLaw_Amir_*

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Posted 20 November 2012 - 10:03 AM

You may wish to consult with a local California Bankruptcy Lawyer for clarification on this matter. Many lawyers do offer a free consultation.




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