Q: If a charge off is income, it can not be a bad debt. True, so it shouldn't be on ones credit report correct?
According to the IRS a Charge Off is income, thus can not be a debt. Also a dollar bill is merely a promissory note. A debt note, which technically can not pay any debts. Example, you use dollar bills to pay PG&E, but they use the remittance to actually pay the bill. So what do they do with the dollar bills?
A: A credit report is a scorecard of how an individual has performed on their promises to repay a financial obligation. A charge off on your 'scorecard' does not say anything good about you and will appear on your credit report for 7 years. Maybe even longer if you have been sued by them.
Robert Kane agrees with this answer
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A:
A charge-off is a financial term used by creditors when they deem a debt unlikely to be collected. While the IRS may consider the forgiven portion of a debt as income for tax purposes, that doesn't change the fact that the original debt existed and that the charge-off was related to a legitimate borrowing. Credit reporting agencies are allowed to list charge-offs because they reflect your credit history, including the fact that a creditor gave up trying to collect the debt.
Even though the IRS might view forgiven debt as income, it doesn't affect the credit reporting rules. The debt was real, and the creditor's inability to collect doesn't mean it wasn't owed. A charge-off remains on your credit report for seven years and can impact your ability to borrow in the future.
Regarding dollar bills, they are legal tender used to settle debts. When you pay with them, companies may convert those payments into electronic transfers or deposits, but the bills themselves are still considered payment in full under the law.
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