Q: On April 2, 2012, when I was on disability, I had a auto loan & returned a vehicle, 'cause I couldn't afford it no more.
On April 27, 2012, they sold the vehicle. About 1 year later on my credit report it showed that the company had put it as a charge off and it was at a zero balance. On April 27, 2019, it dropped off my credit report and it was not longer listed. Now, today, December 9, 2019, I received a summons from the courts from them saying that I am now being sued for the remaining balance. Can they do this, is this legal?
A:
It could be legal, but maybe not because it sounds like the debt may be past the statute of limitations. The statute of limitations in Michigan for a suit to collect a debt based on a written contract is 6 years. The limitations period begins to run when the debt goes into default, not later when the car is repossessed.
I'd recommend you get a consult with a debt collection defense or bankruptcy attorney in your area to review all of the relevant facts and go over your options. You may have a defense to the suit. Feel free to contact me online if you would like to discuss.
A: Charging off an account does not prevent the creditor from collecting it. A charge off is simply the process of writing off a bad debt for tax purposes during the relevant fiscal period.
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