Charge-Off When a creditor writes off a debt as uncollectible — but the debt still exists and can be collected

A charge-off occurs when a creditor — for credit cards, generally at 180 days past due under federal banking policy (FFIEC) — declares an account uncollectible and removes it from their balance sheet as a loss for accounting and regulatory purposes. Despite the name, the debt is NOT forgiven or eliminated. The creditor retains the right to sue for the balance, and may sell the charged-off account to a debt buyer or collection agency. The collection agency then pursues the full balance, often for years. The charge-off can be reported for seven years, counted from 180 days after the delinquency that led to it, not from the charge-off date (15 U.S.C. § 1681c), and it lowers credit scores. Whether interest and fees keep accruing after charge-off depends on the agreement and state law; a creditor that charges off an account and stops adding them no longer has to send monthly statements (12 CFR 1026.5(b)(2)(i)).