A credit report shows a 'Charge-off' status on a credit card with a zero balance and notation 'Transferred to recovery.' What does this indicate about the debt?
Correct Answer
C) The original creditor sold or transferred the debt to a collection agency
A charge-off with zero balance and 'Transferred to recovery' notation indicates the original creditor wrote off the debt and transferred it to a collection agency or debt buyer. The debt still exists and may appear as a separate collection account on the credit report.
Why This Is the Correct Answer
A charge-off with zero balance and 'Transferred to recovery' notation indicates the original creditor wrote off the debt and transferred it to a collection agency or debt buyer. The debt still exists and may appear as a separate collection account on the credit report.
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