In detail
A charge-off is a designation that a creditor uses when it has written off a delinquent debt as a loss for accounting purposes. The creditor typically applies this status after a period of nonpayment, often around 180 days, though the exact timing is set by the creditor's policies and applicable law. A charge-off does not eliminate the debt; the consumer generally still owes the balance, and the creditor may continue collection efforts or sell the debt to a third-party collection agency. Under the Fair Credit Reporting Act, charge-offs are reported as derogatory marks on credit reports and can remain there for seven years plus 180 days from the date of the first delinquency that led to the charge-off. When a charge-off appears on a credit report, it is listed under the original creditor's name and may later be accompanied by a collection account if the debt is sold or placed with a collector. The charge-off status itself can be updated if the consumer pays or settles the debt, but the original derogatory mark is not removed before the reporting time limit expires. The FCRA gives consumers the right to dispute inaccurate or incomplete information, including charge-offs. A charge-off is distinct from a bankruptcy, which is a legal proceeding, and from a collection account, which is a separate tradeline that may be added to a report.