Charge-Off

Banking & Credit

A charge-off is when a lender deems a debt uncollectible (typically after 180 days of nonpayment) and writes it off as a loss for accounting purposes. The debt isn't forgiven — it remains your legal obligation and gets sold to collection agencies who continue pursuing payment. Charge-offs devastate credit scores, dropping them 50-150 points, and remain on credit reports for 7 years. Paying a charge-off doesn't remove it but shows 'paid' status, which slightly helps. Better strategy: contact the original creditor before charge-off occurs to negotiate a payment plan or settlement.