A credit card is charged off when the issuer writes the balance off as a loss, generally after 180 days without a payment. Federal banking policy says credit cards and other revolving accounts that are 180 days past due “should be classified loss and charged off” (Federal Reserve). The card is closed, but the debt isn’t gone. What happens next depends mostly on one decision the issuer makes: keep the debt and collect it, or sell it.
This guide walks through a credit card charge-off month by month, the paths the debt can take afterward, what to do if you’re sued, and how each path should look on your credit report.
Key Takeaways
- Credit cards are generally charged off at 180 days past due, after five monthly late payments.
- After a charge-off, the issuer either keeps the debt and collects it itself, often through a law firm, or sells it to a debt buyer.
- If the issuer stops sending statements after a charge-off, it can’t keep adding interest or fees.
- If you’re sued, respond by the deadline. Ignoring a lawsuit usually leads to a default judgment.
- A sold card should show a $0 balance from the issuer, with the balance reported only by the buyer.
The Road to a Credit Card Charge-Off
| Days past due | What usually happens | On your credit report |
|---|---|---|
| 30 | Late fee, calls, and letters | 30 days late |
| 60 | Another late fee. A penalty interest rate can now apply to your existing balance. | 60 days late |
| 90 to 150 | The card is often suspended or closed, and collection efforts increase | 90, 120, and 150 days late |
| About 180 | The issuer charges off the account and decides whether to keep or sell the debt | Charged off, usually with the unpaid balance |
What Happens to the Balance After a Charge-Off
A charge-off is an accounting step, and the balance is still owed. Capital One says plainly that “the borrower still has to pay back the debt” (Capital One).
One rule is worth knowing. A card issuer can stop sending monthly statements on a charged-off account only if it “will not charge any additional fees or interest on the account” (12 CFR 1026.5). If your statements stopped and the balance on your report keeps climbing, that’s worth checking and disputing.
Three Paths After a Credit Card Charge-Off
| Path | Who contacts you | How it should look on your report |
|---|---|---|
| The issuer keeps the debt and collects it itself | The issuer’s recovery department, or a law firm it hires | The issuer’s charge-off with the unpaid balance |
| The issuer keeps the debt and hires a collection agency | The agency, collecting for the issuer | Usually just the issuer’s charge-off. The agency’s calls are collection activity, not a separate account. |
| The issuer sells the debt | The debt buyer, or a law firm or agency it hires | The issuer’s account with a $0 balance, plus the buyer’s collection account with the balance |
When a card is sold, the issuer’s account should change to show the transfer and a $0 balance. Some issuers remove that account within a month or two, while others leave it on the report, marked transferred, for years. Either way, only the buyer should report a balance. Here’s how charge-offs and collections differ.
If You’re Sued Over a Charged-Off Credit Card
Card issuers and debt buyers do sue, often through law firms that file many collection cases. If you’re served:
- Respond by the deadline on the summons. If you don’t, the court can enter a default judgment against you, which can lead to wage garnishment or a bank levy, depending on your state.
- Check whether the debt is past your state’s statute of limitations, and whether the company suing you can show it owns the debt. Here’s the statute of limitations on debt in each state.
- A law firm collecting the debt is generally a debt collector under the Fair Debt Collection Practices Act, even when the bank itself isn’t. Here’s what debt collectors can’t do.
- Consider talking to a consumer attorney. Many offer free consultations, and some FDCPA cases let you recover attorney’s fees.
For real-world experience, the CreditInfoCenter community forum Is There a Lawyer in the House is full of threads from consumers sued by credit card companies and debt buyers, where members share how their cases went, from answering the summons to settling or going to trial.
Court judgments no longer appear on credit reports, but the charge-off and any collection account do.
Secured Credit Cards and Charge-Offs
A secured card can be charged off too. When the issuer closes a secured card, it generally applies your deposit to what you owe, and any remaining balance can still be charged off and collected. Secured cards from fintech companies are often issued by a partner bank, so the name on your credit report may be the bank’s, not the brand you signed up with. Check your card agreement for how the deposit is handled.
Your Other Cards With the Same Bank
A charge-off on one card can affect your other accounts with the same bank. The bank may close or lower the limits on your other cards, and it may decline future applications. Your accounts with other lenders aren’t directly affected, though the charge-off and late payments can still lower your scores.
How a Credit Card Charge-Off Should Report
Check each of these at all three bureaus:
- Balance: the unpaid balance if the issuer still owns it, $0 if it was sold, paid, or settled
- Status: charged off, paid charge-off, or settled, matching what actually happened
- Payment history: late payments that match the months you actually missed
- Removal date: no more than seven years after the first payment you missed and never made up, and the same at each bureau
- Credit limit and high balance: matching your statements
Anything that doesn’t match is worth disputing with each bureau showing it and with the issuer, on the same day. Here’s how to dispute a charge-off, and how long a charge-off stays on your report.
Frequently Asked Questions
Can a credit card company sue me after a charge-off?
Yes, until the statute of limitations in your state runs out. A charge-off doesn’t end the issuer’s right to collect or sue, and a debt buyer that purchases the account gets the same right.
Does interest keep growing after a credit card is charged off?
It depends. If the issuer stops sending you statements, it can’t add interest or fees. If it keeps sending statements, it may continue charging interest under your card agreement.
Is a charge-off the same as a write-off?
Yes. Both mean the issuer has recorded the balance as a loss on its books. Neither cancels what you owe.
Can I keep using a card after it’s charged off?
No. A charged-off account is closed to new charges.
Should I pay a charged-off credit card?
It depends on who owns it, whether it’s reported accurately, and how old it is. Here’s what to check before paying a charge-off.
What’s the Next Step?
Pull your three credit reports, find each charged-off card, and check who owns it now, what balance it shows, and whether the removal date matches at every bureau.
SmartDispute compares your three reports side by side and drafts suggested disputes for each bureau and each reporting company, for you to review, change, and mail yourself. See how SmartDispute works.