A charge-off means a lender has written your account off as a loss after months of missed payments, usually around 180 days for a credit card. It doesn’t mean the debt is gone. As Equifax puts it, “You’re still legally obligated to pay the debt” (Equifax). The lender can keep collecting, sell the debt to a debt buyer, or sue, and the charge-off can stay on your credit reports for up to seven years.
This guide explains what a charge-off is, what happens after one, how it shows up on your credit report, and what you can do about it.
Key Takeaways
- A charge-off is an accounting step: the lender writes the account off as a loss and closes it. You still owe the debt.
- Credit cards are generally charged off at 180 days past due and installment loans at 120 days.
- After a charge-off, the lender either keeps the debt and collects it itself or sells it to a debt buyer.
- A charge-off can be reported for up to seven years from the original delinquency, plus 180 days. Paying it doesn’t restart or shorten that clock.
- An accurate charge-off can’t be disputed off your report, but charge-offs are often reported with errors you can dispute.
What Is a Charge-Off?
A charge-off is a lender’s decision to stop counting an unpaid account as an asset and record it as a loss. Equifax describes it this way: “the lender or creditor has written the account off as a loss, and the account is closed to future charges” (Equifax).
The timing isn’t random. Federal banking regulators’ policy says installment loans that become 120 days past due and credit cards and other revolving accounts that become 180 days past due “should be classified loss and charged off” (Federal Reserve). Accounts in bankruptcy are charged off within 60 days of the lender being notified of the filing.
What a charge-off doesn’t do is cancel what you owe. Capital One, one of the largest card issuers, says plainly that “the borrower still has to pay back the debt” (Capital One).
What Happens After a Charge-Off?
| Stage | What happens | What shows on your credit report |
|---|---|---|
| Missed payments | The lender charges late fees and tries to collect. | Late payments at 30, 60, 90, 120, and 150 days |
| Charge-off | Around 120 to 180 days past due, the lender writes the account off and closes it. | The account shows as charged off, usually with the unpaid balance |
| Held or sold | The lender keeps collecting itself, hires an agency, or sells the debt to a debt buyer. | If sold, the lender’s account should show a $0 balance, and the buyer may report a collection account |
| Collection or lawsuit | Whoever owns the debt may call, write, settle, or sue, depending on the debt’s age and your state’s statute of limitations. | Payments or a settlement update the status to paid or settled |
| Reporting period ends | The charge-off comes off your reports. | Up to seven years from the original delinquency, plus 180 days |
Held or Sold: Why It Matters
Once an account is charged off, the lender decides whether to keep it or sell it. That decision changes who you deal with and what your credit report should show.
If the lender keeps the debt, its own account stays on your report as a charge-off with the unpaid balance, and it may collect through its own staff, an agency, or a law firm. Some large banks, such as Chase, Wells Fargo, and First Premier, tend to keep their charged-off accounts and pursue them through law firms, while others, such as Credit One and Milestone, usually sell. Capital One sells many of its charged-off cards to debt buyers like Portfolio Recovery Associates, LVNV Funding, and Midland, according to SmartDispute’s collections data. That’s a pattern SmartDispute sees often in member reports, and our data on which banks sell charged-off debt shows how often each one sells. Here’s what happens when a credit card is charged off.
If the lender sells the debt, it no longer owns it and shouldn’t keep reporting a balance. The buyer may report its own collection account, which names the lender as the original creditor. Equifax notes that a sold debt “may appear twice on credit reports,” once from the original creditor and once from the collector (Equifax). Two entries can be accurate. Two balances for the same debt aren’t.
Charge-Off vs. Collection
Credit reports often use the same “Collection/Charge-off” wording for both, which is why they’re easy to confuse.
| Charge-off | Collection account | |
|---|---|---|
| Who reports it | The original lender, reporting its own account | A debt buyer or collection agency |
| How to tell | No original creditor is listed | An original creditor is listed |
| Who you’d pay or settle with | The lender, unless it sold the debt | The collector or debt buyer |
| Debt collection law | The FDCPA generally doesn’t apply to a lender collecting its own debt | The FDCPA applies to third-party collectors |
How a Charge-Off Affects Your Credit
A charge-off is one of the most serious negative items on a credit report, and it rarely arrives alone. The months of late payments that led up to it are on your report too, and both FICO Scores and VantageScore weigh payment history heavily. The damage is largest when the charge-off is new and fades as it ages.
Paying a charge-off doesn’t remove it. The status updates to “paid charge-off,” which is still negative, though Equifax says a paid charge-off “may have less of a negative impact on credit scores” (Equifax). Lenders reviewing an application can also see whether it’s paid, and some care about that more than the score does.
How Long Does a Charge-Off Stay on Your Credit Report?
Up to seven years. Under the Fair Credit Reporting Act, the seven-year period for an account “charged to profit and loss” begins 180 days after the start of the delinquency that led to the charge-off (15 U.S.C. 1681c). In practice, it’s measured from your first missed payment that was never brought current.
That date doesn’t change when you pay, settle, or the debt is sold, and a collection account for the same debt follows the same clock. If a charge-off or collection shows a later date than the original delinquency, that’s worth disputing. Here’s more on how long a charge-off stays on your credit report.
Your Options With a Charge-Off
| Option | What it does | Keep in mind |
|---|---|---|
| Pay in full | Status updates to paid charge-off. Ends collection and lawsuit risk. | The charge-off stays for its reporting period. |
| Settle for less | Status updates to settled. Ends the debt for less than the balance. | Canceled debt can be taxable, and the lender may send a Form 1099-C (IRS). |
| Pay for delete | You pay, and the lender agrees to delete its account. | Large banks rarely agree. Smaller banks and credit unions may be more open to it, so it can be worth asking. Get it in writing before you pay. |
| Dispute errors | Inaccurate, incomplete, or unverifiable details must be corrected or deleted. | Works on errors, not on an accurate charge-off. |
| Wait it out | The charge-off ages and comes off at the end of its reporting period. | You can still be sued until your state’s statute of limitations runs out. |
Common Charge-Off Reporting Errors
Charge-offs pass through several hands and several systems, so errors are common. Look for:
- A balance on a charged-off account the lender sold. Once it’s sold, the lender’s balance should be $0.
- The same debt showing a balance from both the lender and a collector.
- A charge-off you paid or settled that still shows as unpaid, or with the wrong amount.
- A removal date that’s more than seven years after you first fell behind, or that differs from one bureau to the next.
- A balance, credit limit, or high balance that doesn’t match your records.
- A charge-off still reported after its reporting period ends.
- An account that isn’t yours, or that you were only an authorized user on.
Compare all three reports. The same charge-off is often reported differently at each bureau, and a difference is a sign that at least one of them is wrong.
How to Dispute a Charge-Off
- Pull your three credit reports and note exactly what’s wrong at each bureau.
- Write a specific dispute for each bureau showing the error: the account, the detail that’s wrong, and what it should say.
- Send a dispute to the lender that reported the charge-off on the same day. A lender that finds its information inaccurate must correct it at every nationwide bureau it reports to (15 U.S.C. 1681s-2).
- Include copies of your proof, such as payment confirmations, a settlement letter, or a sale notice, plus a copy of your ID and proof of address for the bureaus.
- If the charge-off comes back verified with the error still there, send a second round with new information. SmartDispute’s approach is to send round two 35 days after the first round is mailed.
Here’s how to remove a charge-off without paying, and how the credit dispute process works from start to finish.
Frequently Asked Questions
Do I still owe a charged-off debt?
Yes. A charge-off is an accounting entry for the lender. The debt still exists, and the lender or whoever buys the debt can still try to collect it.
Can a charge-off be removed from my credit report?
An accurate charge-off can stay for up to seven years. It can be removed early if it’s inaccurate, incomplete, or can’t be verified, or if the lender agrees to delete it.
Is a charge-off worse than a collection?
Both are serious negative items. If a charged-off debt is sold, you may have both on your report for the same debt, which is why it matters that only one of them shows a balance.
Will paying a charge-off raise my credit score?
Not by removing it. The status changes to paid charge-off, which may count somewhat less against you and looks better to lenders who review your report.
Can I be sued over a charged-off account?
Yes, until the statute of limitations in your state runs out. A charge-off doesn’t end the lender’s right to sue, and some banks routinely use law firms to collect charged-off accounts.
What’s the Next Step?
Pull your three credit reports, find every account marked as charged off, and check who owns each debt, what balance it shows, and whether the dates match at each 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.