Guide

What Is a Charge-Off? What It Means and What Happens Next

A charge-off is when a lender writes an unpaid card off as a loss, usually by 180 days late. You still owe it, and it can stay on your credit report 7 years.

Updated September 25, 202610 min readReviewed by Netanel Baruch, NFCC-certified credit counselor

On this page

What a charge-off means
When a credit card gets charged off
Before a charge-off: call the card company
How long a charge-off stays on your credit report
Does paying a charge-off remove it?
If the charge-off is wrong
Who collects a charged-off debt
Can they sue you?
Your options for a charged-off credit card
Pay it in full or on a plan
Nonprofit credit counseling
Settle for less than the balance
Bankruptcy
A charge-off isn't the same as forgiveness
Bottom line
Common questions
Sources

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A charge-off is when a lender writes an unpaid debt off as a loss on its own books. For a bank credit card, federal banking guidance says that happens by the time the account is 180 days past due. A charge-off doesn't cancel what you owe: the bank can still collect, sell the account to a collector, or sue, and the charge-off can stay on your credit report for up to seven years.

What a charge-off means

"Charged off" is an accounting term. The lender has decided it probably won't be paid, so it moves the balance off its books as a loss.

What it doesn't mean is that the lender has given up. The Office of the Comptroller of the Currency, which supervises national banks, says a charge-off does not eliminate your obligation to the bank, and that unless the bank forgave or canceled the debt, you're still obligated to repay it. After a charge-off, the bank may attempt to collect the debt itself, or in some circumstances sell the account to a collection agency.

So a charge-off changes who might contact you and what your credit report says. The debt itself is still there.

When a credit card gets charged off

Banks follow a policy set by the federal bank regulators. Under it, open-end retail loans that become past due 180 cumulative days from the contractual due date should be classified loss and charged off. A credit card is an open-end loan. The same policy tells banks to record a loss when they become aware of it, but in no case should the charge-off exceed the time frames stated in this policy. That makes 180 days a deadline, not a waiting period, and a bank can charge off sooner.

Two other rules in that policy matter for people in trouble:

If you file for bankruptcy, the bank charges off the account within 60 days of receipt of notification of filing from the bankruptcy court, or sooner if the 180-day limit comes first. The exception is when the bank can clearly show, and document, that it's likely to be repaid.
If you catch up before the deadline, a bank may "re-age" the account, treating it as current again. For an open-end account, the policy says the account has to have existed for at least nine months and the borrower has made at least three consecutive minimum monthly payments or the equivalent cumulative amount. Banks shouldn't re-age an open-end account more than once within any 12-month period and no more than twice within any five-year period. Re-aging is the bank's choice, not a right, so ask about it directly.

Here is how the dates line up on a bank credit card. The exact days depend on your lender and your state.

When	What happens
First missed payment	The account is delinquent. The CFPB says a delinquency can stay on your credit report for up to seven years.
90 days past due	Bank policy classifies the account as "substandard," an internal warning grade.
180 days past due, at the latest	The bank charges off the account.
180 days after the delinquency began	The seven-year credit reporting period starts.
About 7½ years after the delinquency began	The charge-off can no longer be reported, with limited exceptions.
Your state's statute of limitations	A separate clock that decides how long a creditor or collector can sue.

If you're still on the early rows of that table, the next section matters most. For the whole path from a first missed payment onward, see what happens if you stop paying credit cards.

Before a charge-off: call the card company

If you're behind but not yet charged off, the cheapest fix is usually the card company itself. The CFPB says many companies run hardship programs that let you postpone a set number of monthly payments or pay a lower monthly payment at a reduced interest rate until the balance is repaid. Some will discuss settling for less than you owe, depending on their policies and your account. Get written confirmation of any arrangement you agree to.

The FTC's advice is short: if you're behind on your bills, call the creditors you owe money to. Don't wait. A hardship plan or a re-aged account costs you far less than a charge-off.

How long a charge-off stays on your credit report

The Fair Credit Reporting Act bars credit reports from including accounts placed for collection or charged to profit and loss which antedate the report by more than seven years. "Charged to profit and loss" is the legal name for a charge-off.

The seven years don't start on the charge-off date. The law says the period begins upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency that came before the charge-off or collection. Say you first fell behind in March 2026 and never caught up. The 180 days run out in September 2026, and the charge-off can be reported until about September 2033.

Lenders have to report that date. When an account is charged off or sent to collections, the lender must tell the credit bureau the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency. The FTC's guidance for companies that report to credit bureaus says repeatedly placing an account for collection or using different collectors does not change the delinquency date. In a 2000 staff opinion letter, FTC staff also said a sale of the charged-off account by the creditor doesn't change the allowable period for a CRA to report a chargeoff. Staff letters like this one are not binding on the Commission.

Three more points on reporting:

The CFPB says credit reporting companies generally can report most negative information for seven years.
The seven-year limit doesn't apply to every report. The law exempts reports used for a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more, for life insurance of that size, and for jobs paying $75,000 or more a year.
If a creditor sues and wins, the CFPB says a judgment can be reported for seven years or until the statute of limitations runs out, whichever is longer.

Does paying a charge-off remove it?

Not by itself. The FTC says a credit bureau can report most accurate negative information for seven years. It also warns that anyone who promises to clean up your report by removing accurate information from your credit report is making an illegal claim. Be wary of any company that says otherwise.

Paying still matters. It can stop collection calls, and it takes away the risk of a lawsuit and a court judgment. Whether and how a payment changes your credit score depends on the scoring model; the CFPB notes that each credit score may differ depending on the scoring model.

If the charge-off is wrong

Errors do happen: the wrong balance, the wrong delinquency date, an account that isn't yours. You can dispute with both the credit bureau and the company that reported it. The FTC says to send the bureau your complete name and address, each bit of inaccurate information that you want fixed, and why, with copies of your documents, and that the credit bureau has 30 days to investigate it. While you dispute with the lender, the law says it may not furnish the information to any consumer reporting agency without notice that such information is disputed.

Who collects a charged-off debt

After a charge-off, one of three things usually happens: the bank keeps collecting in-house, it hires a collection agency, or it sells the account to a debt buyer. When a collector contacts you, federal rules let you check the debt before you pay anything.

The CFPB says collectors generally must give you the name of the creditor, the account number, the current amount and an itemization of the current amount of the debt that reflects interest, fees, payments, and credits. Under Regulation F, the starting point for that itemization can be one of five dates, and the charge-off date is one of them. That lets you check the collector's figure against your last statement from the bank.
The notice gives an end date for a 30-day dispute period. If you dispute in writing or ask for the original creditor's name within that window, the collector must pause collecting the amount of the debt you are disputing until they've adequately responded.
The FTC says collectors can't contact you before 8 a.m. or after 9 p.m., unless you agree to it.

Can they sue you?

Yes, within your state's statute of limitations. The CFPB says most states set that limit between three and six years for debts, though it can be longer and varies by the type of debt and your contract. It's a different clock from the seven-year credit reporting period: a debt can still be on your report after the time to sue has passed, or the other way around.

If a creditor wins a lawsuit, the FTC explains that it can then get a court order, called a garnishment, to take money from your paycheck, and collectors can also get court orders to take money from a bank account. Once the limit has passed, collectors can't sue or threaten to sue you, but they can still ask you to pay.

Your options for a charged-off credit card

They're in order of how little each asks you to give up. Whichever you consider, first confirm the amount and who owns the debt now.

Pay it in full or on a plan

If you can afford it, paying the balance ends the debt and any lawsuit risk. A collector or the bank may accept payments over time. The CFPB's advice when you negotiate: get the plan and the debt collector's promises in writing before you make a payment, and don't agree to more than you can afford.

The downside is that it takes the most cash, and the charge-off history stays on your report either way. If you have other cards that are still open, a payoff plan shows how a charged-off balance fits alongside them and when you'd be done.

Nonprofit credit counseling

A nonprofit credit counselor can go through your whole budget with you, charged-off accounts included, and tell you whether a debt management plan fits the debts that are still open. Counseling is often free or low-cost, but the FTC notes that nonprofit status alone doesn't make a service free or affordable, so ask about fees first.

Settle for less than the balance

Charged-off accounts are often where settlement talks happen, because the lender has already recorded the loss. You can negotiate yourself, or pay a settlement company to try. Either way:

Get the agreement in writing before you pay.
The forgiven part can be taxed. The IRS says that if your debt is canceled, forgiven, or discharged for less than the amount owed, the amount of the canceled debt is taxable, with exclusions that include debt canceled to the extent insolvent. The creditor may send you a Form 1099-C. A tax professional can say how it applies to you.
Settlement companies charge fees and carry their own risks. Read debt settlement pros and cons first.

Settlement percentages and fees vary, so any estimate rests on assumptions. The settlement estimator lets you change them.

Bankruptcy

If charged-off cards are part of a larger debt load you can't realistically repay, a bankruptcy attorney can explain whether Chapter 7 or Chapter 13 applies. It's the option that asks the most of you, and bankruptcy information stays on your credit report for 10 years. The pillar guide on how to get out of credit card debt covers the basics.

A charge-off isn't the same as forgiveness

A charge-off and canceled debt are different events. The charge-off is the lender's bookkeeping. Cancellation is when the lender actually gives up the right to collect some or all of the debt, for example in a settlement. The IRS notes that if a creditor continues to attempt to collect the debt after you receive a 1099-C, the debt may not have been canceled. If you get a 1099-C that looks wrong, contact the creditor. You still have to report the correct taxable amount, regardless of the accuracy of the Form 1099-C you received.

Bottom line

A charge-off is the lender recording your card as a loss, at 180 days past due at the latest for a bank card. You still owe the money, and the mark can stay on your credit report for about seven and a half years from when you first fell behind. If you're not there yet, call the card company now. If you are, confirm the debt, keep an eye on your state's deadline to sue, and compare paying, counseling and settling on their real costs. The Debt Check puts your own debts through the same comparison.

Common questions

Do I still have to pay a charged-off credit card?

Yes. The OCC says a charge-off doesn't eliminate your obligation, and unless the bank forgave or canceled the debt, you're still obligated to repay it. The bank may collect it itself or sell the account to a collection agency.

How long does a charge-off stay on my credit report?

Up to seven years. Under the Fair Credit Reporting Act, the seven years start 180 days after the delinquency that led to the charge-off began, so the entry can show for about seven and a half years after you first fell behind.

Will paying a charge-off take it off my credit report?

Not by itself. Credit bureaus can report accurate negative information for seven years, and the FTC warns that anyone who promises to remove accurate information from your report is breaking the law. Paying can still stop collection and the risk of a lawsuit.

Is a charge-off the same as debt forgiveness?

No. A charge-off is how the lender records the loss on its own books. If the lender later cancels part of the debt, for example in a settlement, it may send you Form 1099-C, and the IRS says canceled debt is generally taxable unless an exclusion applies.

Can I be sued over a charged-off credit card?

Yes, as long as your state's statute of limitations hasn't run out. The CFPB says most states set that limit between three and six years for debts, and in some states a partial payment can restart it.

Sources

By DebtCheckUSA Editorial Team. First published September 25, 2026. Advertiser disclosure

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