Charge Offs
What is a Charge Off?
A charge-off or charge off is a declaration by a creditor that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors make this declaration at the point of six months without payment. A charge-off is a form of write-off.
If you repeatedly fail to make your credit card payments on time, your credit card account becomes delinquent. Once your account becomes delinquent, your creditor will attempt to collect these funds. Lenders are first and foremost concerned with recouping their losses, so you will receive ongoing notification of overdue accounts through calls, emails and messaging.
Usually, a charge-off happens after six months of delinquency. If your account designation on your credit reports is “charge-off,” the original creditor still owns your debt. Once your debt is sold, your credit report designation will be changed to “collections.” At this point, you would need to deal with the debt buyer who now owns your debt.