What if I told you that your debt didn't vanish because you paid it? It vanished because the bank already got paid. Now, in this video, I'll break down what charge off really means, how banks write it, write off debt, and get reimbursed and sell your account, and why that debt might not be enforcable anymore. Now, I've studied banking operations, credit law, and administrative remedy, and I'm here to expose what happened behind the scenes when your debt is charged off. Now, before we dive into this video, remember to like, remember to subscribe to the channel. Thank you guys for doing that. That right there is an investment into me so that we can keep posting content just like this. Now, this is also not legal advice. This is not financial advice. This is only for educational purposes only. Don't take everything that I say for face value. Make sure you are willing to do your due diligence. You dig me? Happy Monday to you guys. All right. Now, we've talked about the aspect of charge offs in my videos. And sometimes it'll be in the middle of the video, sometimes it'll be at the end, sometimes it'll be at the start. Sometimes we'll um you know uh uh even make that the premise, but that's not it's not dedicated to it. Okay. So, in this video, I'm going to be breaking down the truth behind charge off. So, make sure you guys stay all the way to the end because we're going to be talking about some key things that will help you understand exactly what is happening, okay? So that you'll know exactly how to be able to fight back. Now, before we dive into this video, let's talk about what a charge off is, okay? really a charge off is an accounting move, not a cancellation of your obligation. Okay? So, a lot of times we look at that and and we think that they are inherently just trying to cancel your obligation. It's not that the obligation doesn't get discharged or canceled out. It's more of an aspect of them moving for their benefit. Okay? And long story short, when a charge off happens, it typically happens after 180 days of non-payment or when you default and the bank writes off the debt as a loss. Okay? Now, this is typically done for tax and balance sheet purposes and it's not really to forgive you. Now, there's a definition between forgiveness and discharge. Forgiveness is more of you asking for permission versus discharging is something that um inherently happens or more importantly it's something that you initiate. Okay? So they're not going to discharge debt for you or they're not going to forgive you if that makes sense. This is why they still come after you for it. So here's the important aspect. They may still try to collect but the original lender has moved on. Okay? It's a write- off for them, but it becomes a weapon against you because once you have a charge off that the the the negative that happens to you is that charge off shows up on your credit report. Now, if that charge off is showing up on your credit report, this is where we kind of put ourselves in a position to where we start to where we can't really it affects our credit report and makes us not able to apply for funding, makes us not be able to get loans, makes us not be able to uh, you know, secure credit. But that's the idea, okay? They hope to put this information on your credit report so that you would then pay them again to get it off your credit report. Okay. But what we're going to talk about is how after a bank gets puts after a bank charges off your account, they really forfeit their ability to collect on a debt. Okay. So, moving on. Here's how banks still get paid after the charge off. Okay. The bank uses what's called GAP rules to I'm sorry, GAP rules to remove bad debt from the book. So they often use this to claim insurance. Okay, so loss coverage on debt that has been defaulted on, debt that you don't pay back, and they also use this as an opportunity to sell the accounts to debt buyers for pennies on the dollar. Okay, most people don't know that after you see a debt is being charged off and let's just say a debt collector is reaching out to you about that charged off debt, it's the fact that they bought your information and now they're coming after you because they know that you quote unquote owe a debt. But here's where the power kind of just we here's where we lose our power because we don't know that the charge off it means that they have already settled on the debts. Okay? It means that it was discharged. Okay? It means that it became taxable income to them. So if it became taxable income to them, then they was able to make the the right amount the right amount of money from that particular account. So you'll say, well, you know, why are they collecting again? Well, that's where the legal part comes into play because there's a such thing as double recovery where a bank cannot recover or anybody for that matter. If the original party was already compensated in the eyes of the judge, if they try to collect on a debt that has already been charged off or settled, then that would be considered unjust enrichment. That would be considered what's called double recovery. That would be what people also call double dipping. That'll be what people also call double collection. So, but they use the GAP to be able to claim insurance, sell the account to debt buyers for pennies, and also issue a 1099 C to report cancelled debt to the IRS. Okay, now here's the thing. If the bank got paid via insurance or sale, they may no longer have standing to collect. And this is where we kind of just take advantage of that information. If I see an account that's charged off or if it's an account that I can't pay, I'll just let it get charged off. Okay? And if it gets charged off, I know for a fact that they already made their money. And this is where they try to uh uh this is where someone else try to step in after they see that information being reported and try to take the money from you as well. Okay. So when you look at the GAP, I mean it's a set of rules that dictates how financial statements are prepared and presented in the United States. These principles aim to standardize financial reporting ensuring consistency, accuracy in the information shared with the investors and other stakeholders. Okay, it says GAP is not a single rule but rather a collection of principles, standards and practices. So long story short, this is this is just they're able to do these things based on the aspect of GAP. So to break this down further, if the charge off equals the accounting write off and not a not a legal forgiveness, if a loan is p unpaid for 180 days for revolving credit or 120 days for installment loans, the creditor must under the GAP remove it from their books as an asset and list it as a loss or a bad debt expense on their income statement. So they use this to their advantage so that they're able to well this is what they're supposed to do under GAP. Okay? Why? Because the loan is no longer performing and continuing to report it as an asset would misrepresent their financial condition. So they're supposed to report and disclose true and honest information. Now, this is the part that they don't tell you that they claim the loss on their taxes or insurance, and once it's charged off, the bank can use an IRS form 1099C to report cancel debt, triggering a potential tax burden on you, and write it off as a business loss. Possibly get insurance reimbursement or loss coverage through the FDIC or private risk instruments. So, here's where the debt here's where the discharge comes into play. If they have been reimbursed and sold the debt, then they've been made whole. What does that mean? That means that they have been paid. Okay? Yet someone, usually a debt collector, still tries to collect without legal standing. Notice once the debt is charged off, the bank essentially has clean hands and they stop coming after you for the debt. Okay? And it's typically a debt collector. LVNV Investments. Um, it's typically uh uh uh uh you know, Midland Credit Union, Resurgence, you know, all these debt collectors we we usually get on our credit reports. So, I say this to say that it's the debt still exists, but in a more different form. See, the GAP doesn't make the debt go away, but it reclassifies it from an asset to a nonreoverable loss. Okay? This means the bank no longer expects repayment from you. So, here's where the misrepresentation happens through debt collectors. Debt collectors will reach out to you and say that they're trying to get this money for the bank, but the reality is is once the debt is charged off, they cannot they don't expect repayment. This is the lies that the debt collector will tell you. So, typically what happens is when you reach out to that creditor and you say, "Hey, you know, X Y and Z, do you still have this debt blah blah blah?" they they're going to refer you to the company that they sold the debt to. Okay, here's what they often do. Okay, they after they charge off the debt, after they report this information to the GAP, they sell the debt to the third party buyer, usually for three to 10 cents on the dollar, and the debt buyer now owns a claim, not a contract. Okay? So when a debt buyer owns a claim and not a contract, it's literally the claim that you owe debt. And you have a right to challenge anybody's claim. If they try to say that you uh uh owe something or or required to do something, you have a right to challenge their claims. Okay? That claim is often missing chain of title violating your rights under the FDCPA, which is 15 USC 1692G, which is one of the primary things that I talk about where you're able to validate debt. Now, here's why this matters, okay? You can now ask the lender, okay, who wrote it off, what was the lost event, okay? You can ask them, hey, did they issue a 1099 C? If so, they can then then they declared it canled. You can also ask if they were reimbursed, who has lawful standing on to collect? And number four, if the debt was sold, does the buyer have proof of assignment and the original contract, not a photocopy? And by invoking these facts, okay, you would invoke this through debt validation letters. You will invoke this through conditional acceptance. You will invoke this through affidavits of dishonor. And you begin to expose the lack of standing, consideration, and whether or not their claim is enforcable. So, let's talk a little bit about that. Okay. When you start to challenge them under 15, you would see 1692G. Okay. And you start to challenge them under the truth and lending act. When you start to challenge them, well, you really are sticking through the FDCPA because they're not going to be able to get past the FDCPA because there's no contract between you and them. Okay? So, the strategy is make sure you send them a debt validation letter. Debt validation letter is simply saying, "Hey, I would like to validate this debt." asking them for that particular information like the loss of events, asking them if they have proof of ownership, asking if they're the legal holder in due course, asking if there is a original contract, asking them if there was a 1099 C that was uh released, asking them for this information. If they're unable to provide it, then the debt is invalid. Then we go to the aspect of conditional acceptance. Hey, look, I will do X Y I will I will agree to pay if you can prove X Y and Z. And this goes to the debt validation aspect, okay? And if they don't respond, if they ignore you, which they do, or if they just send more collection letters, or if they start to to do phone calls after the letter, this is an affidavit of non-response or dishonor. You want to let them know that they are dishonoring you. You want to let them know that they are ignoring you and they're in violation of the FDCPA. After you send a letter that actually works, they'll try to call you. They'll try to email you for the next month so that it can get out of that status of, you know, because let's just say they send you send them a letter, they hope time passes before you challenge them again. But when it comes to the administrative process, you want to be right on top of it. Meaning, if you send them a letter this month, you have to be prepared to send them another letter next month, regardless if they respond or not. Okay? And you definitely want to respond if they send you a letter. But a lot of times I'll get messages in the comments and people will say, "Well, they ignored me." Well, yeah, that's what they want. They don't want to continue the conversation because they know they are going to have to give up some information that is essential that will keep them from making the money that they want to make. Okay? So, you want to ask for that original loan agreement, proof of ownership, chain of custody. You want to ask them if there is a 1099 Copy B. You want to ask them proof that the current collector has authority. Okay? And if they can't provide it, the debt becomes uninforcable under contract in consumer law. Okay? You are not avoiding responsibility when you are doing this. You are only exposing the fraud because if it's not fraudulent, then there should be some truth. You dig me? So this is this is why we we the power comes in knowledge and not really in the in the process. I can break down the process, but once you know the law, once you know the FDCPA, once you know the the your rights under the Truth and Lending Act, then that's where the power comes. I mean, just think about a lawyer. If he gets approached by a police officer, he knows exactly what to do, his rights, and how to be able to uh make the police officer look stupid. Okay? So, it's the same exact thing. So, let's talk a little bit more about an advanced tactic to challenge the 1099C in discharge. Okay. So, you want to request a copy from the 1099 C from the original creditor. Okay. If it's Capital One and Resurgence is collecting from you, you want to immediately reach out to Capital 1 and ask them for the 1099 C if it is charged off. Okay? And if issued, the debt has been cancelled. That IRS form is proof. Okay? If you reach out to them and they don't provide that, then this is where you want to challenge the company on their negligence. Okay? Oh, I asked them for the 1099 C and they said that they don't have it. Why are you lying to me? It says here that it's charged off. So, if it's charged off, you should have this information. Okay? So, you use that IRS form as proof that the debt has been cancelled. And if it's been cancelled, then nobody can collect on it. Okay? They don't expect repayment. So that actually just debunks the debt collector trying to say that you are trying to make sure that they get paid. No, no, you're trying to make extra money. So you would use it in your affidavit or legal response as evidence of settlement. So when you send your your debt validation letter, you have this information. You want to send it to the debt collector. As soon as you send it to the debt collector, the debt collector is literally going to stop bothering you. They might sell your debt off to somebody else. So expect that. pair it with the trust structure or an administrative process for discharge. So, you can send this through your trust, your private trust, and be able to assign the obligation to your trust, and it'll make the negotiations much smoother, and it'll fall under trust law. It'll fall under common law. It'll fall under um it it will make things out it it won't just stick to the UCCC, if that makes sense. because there's some aspects of the UCCC especially when you look at um um UCCC1-103. Okay, which essentially is is is making the UCCC not the only way that a judge may treat your case. Now, it's going based off of equity and and and fairness versus just commercial procedures. Okay, so this is where the trust becomes more of a benefit. And you can also use the administrative process, which is what I stated before, debt validation, conditional acceptance, affidavit of non-response, and taking them through two, three presentments and challenging them on their claims, having them defaults, and you can use this to be able to number one, enforce them to either provide the proof or the debt is invalid. Okay, here's another um code that I want to talk about. 26 USC 6050P returns relating to cancellation of indebtness by certain entities which pretty much just breaks down um the aspect of reporting canceled debt. It says any applicable entity which discharges in whole or in part the indebtness of any person during a calendar year shall make a return at such time in such form as the secretary by regulations prescribed. Okay, so long story short, in the name, address, and the TIN of each person whose indebtness was discharged. Okay, it's funny they're using the word discharged, but a lot of people say, "Well, you can't discharge that. That is a myth." But why does it say in the Constitution? All right. Okay. And it even talks about shall not apply to any discharge less than $600. So, obviously, if it's over $600, then they file a 1099 C. And that specifically is boom, it's literally being discharged. It says it right there. So anybody who says, well, you can't do this or this is not true. Why would the the Congress put this in the rule book? Okay. Then we can talk about the aspect of 15 I mean just for the formality sake. 1692G. Okay. Just for formality sakes, if you wanted to particularly see that there is a law literally talking about validating debts, it's right here. See, I'm going to come here and I'm going to site my sources under 15 USC 1692G. But then we can also go to UCCc 3-305, which gives you the ability to defend against any fraud, any fraudulent activity, any um situation where you have signed a contract under the rest or any type of situation where someone is an illegal holder in due course, you have a right to defend yourself versus people's claims. Okay. And then 3-603. Okay. Then we can go to the aspect of tender payment where when you create an instrument and you challenge a company on whether or not uh uh uh that is a negotiable instrument to pay off a debt and if they refuse your negotiable instrument or your tender then there is discharge. Okay. So knowing some of these laws give you the ability to not only dispute instruments but also create your own tender and if the tender is refused then there is discharge. There's no situation to where a company can just ignore you for for uh responding and and challenging them on a debt. They ever ignore you. They're actually putting themselves at more of a detriment. But it can't be in a detriment if you don't know what you're doing. They can't be in a detriment if you don't know how it works. And long story short, if the bank declares it gone, then the question is why are you still paying? Yes, it's more of a rhetorical question. And obviously you're still paying because you don't know. But that's why you should start to learn. That's exactly why you should dive deeper into the information because when you know these laws, when you know your rights, then you're able to take advantage of it. See, even on the sense of people talking about uh uh uh you know, all these different processes, they don't help you understand exactly, you know, yes, they'll ask these questions and make you question and get emotional about it, but they won't tell you where to exactly go. They don't tell you where to look. Okay, even when we talk about police officers and things like that and how to be able to communicate with a police officer, I may even do a video about that as well, okay? Because a police officer is also a debt collector. A police officer also falls under the FDCPA when they try to give you a ticket. So, let me know if y'all want me to do a video on that. But long story short, look man, the whole premise of this video is to when you see a charge off on your credit report, just know that that right there is literally, you know, a kid in the candy factory for me. Okay? If you ever get to a point to where he's like, damn, I can't pay this debt. What's going to happen? They're going to charge off your debt. Okay? There's nothing wrong with defaulting on a loan. Now, understand that when you do default a loan, here's probably to every in there is out. To every negative there's a to every positive there's a negative. Just know if it gets charged off, they're going to throw it on your credit report. You're gonna have to do some work to make sure that comes off your credit report. Okay? Just know if it charges off, you know, for a limited time, maybe a couple months, maybe even faster depending on how uh strong you are in your letters. But yeah, this stuff may may hurt your credit report and maybe have you in a in a you know, in a situation for a little bit until you dispute these things. But just know that a charge off doesn't mean you have to pay. You dig me? People will charge people will get a charge off in their account and the bank will still reach out to them. Not that even the bank, the debt collector still reach out to them and say, "Hey, you owe X Y and Z." But the reality is is not that you owe it anymore. So that's the beauty about understanding this because you know a lot of people think that you know charge offs you know is a bad thing but it's really not. Okay? Because think about it, if it didn't go on your credit report, would you you wouldn't even be worried about it. That's why they created a credit system to get you to panic and get you to be, you know, uh uh uh uh I mean, debt collectors don't make money off of trueness. They make money off of manipulation. It's just the game, you know, I mean, so charge off doesn't mean that you're free, but it does mean that that the game has changed. And when you understand what they wrote off, who bought it, and how to challenge it, you actually regain control. And so that's what we're all about on this channel. Whether you have to watch all of my videos to get a full understanding so that you aren't able so that you're not being taken advantage of, do what you got to do. But let's just say you wanted to be able to get templates and tools and you wanted to be able to get the resources or even the or even my charge off remedy toolkit validation templates and things in that nature. tap in down below into the complete debt guide. The complete that guide will literally break this stuff down, help you understand it, help you understand 1099 C, help you understand how to be able to use it against them. And also at the same time, I'll even link a 1099 C video down below. Okay? So, tap into that. Number two, if you want to work with me one- on-one down below, I have a one-on-one mentorship. Now, it is a private coaching experience. So, what I would recommend you to want to do more than just get out of debt because it's not about getting out of debt. It's about using this to build wealth. And this is just one of my philosophies that I talk about. And if you are somebody who's trying to build wealth, then tap into that one-on-one mentorship. If you're somebody who's actually trying to change your life, tap into that one-on-one mentorship. I don't just work with anybody, okay? You have to already have something going on. You have to already have a plan in place before you get on the phone with me, okay? Number three, tap into my Instagram at biz.nick. Also, you can tap into my Twitch at biz_nick. Okay, I plan to do live breakdowns and when either decide on whether I'm just going to just go ahead and do it or if I'm going to wait till I get to a certain amount of followers before I do that. And that number for me is going to be 100 followers. We just throw that out there. If I get impatient, I may just go live. You know what I mean? just to be able to bring some awareness to it. And my last question is, have you ever been hit with collections years after a charge off? Drop a comment down below. Remember to like, subscribe, turn on the post notification. Remember to comment the word discharge because the truth changes everything. I love you guys and I'll see you in the next