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What is a “charge off” account?

The term “charged off” means that the lender has given up on receiving payment on the account and has written it off as loss. They may then transfer or sell the debt to a collection agency.

The original account will be updated to show a payment status of “charged off.” If sold or transferred to collections, there also will likely be a collection account added to your report.

A charge off will affect your credit history very negatively because it shows you did not repay the debt. The account will stay on the report for seven years from the original delinquency date of the debt.

The original delinquency date is the date the account first became late and after which was never again current.

If the account hasn’t been sold or transferred to a collection agency, you can contact the creditor directly to make payment. The account will not be removed once it is paid, but it will be updated to show “Paid Charge off.” Although still negative, lenders usually view a paid charge off slightly more favorably than unpaid debt.

If the account has been sold or transferred to a collection agency, you need to contact the collection agency to make payment. The collection agency is now the legal owner of the debt. If the collection account also appears on your report, it too will be removed seven years from original delinquency date of the charged off account.

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Scoped on: 11/01/2016

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