Credit & Debt
What is Charge-Off?
A charge-off happens when a creditor gives up on collecting a debt after a long period of non-payment—typically 180 days for credit cards, 120 days for installment loans. They write it off as a loss and close the account. But charge-off does not mean the debt is forgiven.
You still owe the money. The creditor can keep trying to collect, hire a collection agency, sell the debt to a third party, or sue you.
A charge-off is a major negative on your credit report that severely lowers your score. It stays there for up to seven years from the date of your first missed payment (Date of First Delinquency).
Quick Facts
PRACTICAL EXAMPLE
A cardholder stops making payments on a $3,000 credit card balance. After 180 days of delinquency, the issuer charges off the account, writes it off as a loss, and sells the debt to a collection agency, severely damaging the cardholder's credit score.
Explore Related Financial Tools
Explore Related Financial Guides
Learn More Key Concepts
Disclaimer: NetWorthFlow provides financial calculators, simulators, and projection tools for informational and educational purposes only. None of the calculations, data, or results displayed on this website constitute professional financial, investment, tax, or legal advice. All calculations are mathematical models based on user-supplied variables and general assumptions, which may not reflect real-world market outcomes. Always consult with a certified financial planner, licensed investment advisor, or qualified tax professional before making any financial decisions.
Automated tools are not a substitute for professional counsel. We strongly advise that you consult a qualified Certified Financial Planner (CFP®), Registered Investment Adviser (RIA), Certified Public Accountant (CPA), or legal expert before making significant decisions regarding taxes, mortgages, retirement planning, investments, or debt management.