Charge Off: What is it – Do I Still Have to Pay


charge off does not end debt

By Wild Guru Larry on Flickr

A “Charge off” is an accounting device used by creditors.  Generally, if a debt has not been paid for 180 days, the original creditor will write off your debt, removing it from their books.  It does not mean that the debt no longer exists or that you no longer have the obligation to pay.  The debt might be assigned or sold to a collection company that will call out the dogs to continue collection activity. 


Charge offs remain for up to 7 years on a credit report from the date of delinquency.  This is about as bad a notation as can be found on any credit report.  It indicates that there has been no payment on the debt for over a half a year.  As a practical matter charge offs can linger much longer than 7 years on credit reporting unless affirmative removal steps are taken by the debtor.


After the charge off, the creditor can take a tax deduction on the account.  That’s why they take the charge off, and then incur another gain by selling the old account, usually together with a bulk of other similar account, to debt collection entities.  Despite the bookkeeping activity, the legal validity of the debt remains.

Charged off debt gets discharged in a chapter 7 bankruptcy if all is done properly.  Bankruptcy may be a consideration if the debtor qualifies under the bankruptcy code.  There is more on this elsewhere in my blog.

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About Andrew Myers

Attorney Myers is a member of the American Association For Justice, Massachusetts Academy of Trial Attorneys, New Hampshire Association For Justice, National Association of Consumer Bankruptcy Attorneys & Rotary International. Legal services provided in Massachusetts (MA) and New Hampsire (NH).

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