Charged Off Debt Must Still Be Repaid

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Dear Experian,

What does it mean when Account Type/Status says "Charge Off"? Does this mean I no longer owe this amount?


Dear ERS,

The term "charge off" means that the original creditor has given up on being repaid according to the original terms of the loan. It considers the remaining balance to be bad debt, but that doesn't mean you no longer owe the amount that has not been repaid.

After an account is charged off by the original lender it is usually sent to a collection agency. The collection agency will then attempt to recover the remaining amount and potentially additional interest and fees.

The collection agency may represent the original lender, or it may purchase the debt from the original lender and become the new debt owner. Either way, you signed a contract agreeing to repay the debt, and that contract remains in effect until you have paid off the entire amount or reached agreement with the debt owner to repay less than originally agreed.

If the debt is sold to a collection agency, you should pay the collection agency, not the original lender.

The charged off account and any subsequent collection accounts will be removed from your credit history after seven years, but will have a very negative impact on credit scores during that time.

Thanks for asking.
- The "Ask Experian" team