Question: What Is A Charge-Off
Answer: Many people mistakenly think when a debt has been charged-off that it's been cancelled by the creditor. This is not true. You are still responsible for paying off the debt. However, you will not be able to use your credit card to make purchases.
Companies, including creditors and lenders, have profits and losses every year. They make money from profits and lose money from losses. When a creditor charges-off your account, it's declaring your debt as a loss for the company.
Even though the creditor has acknowledged your debt as a loss in its financial records, you don't get away free. Your creditor will add a negative entry (a charge-off) to your credit report and continue to attempt to collect on the debt.
An account is usually charged off after 180 days, or six months, of less-than-minimum payments. The charge-off will remain on your credit report for seven years from the date it was charged-off. If you pay the debt, it will be updated with a status of "Charged-Off Paid" or "Charged-Off Settled." Either is better than a simple "charge-off" status, but are still undesirable.
The only way to remove a charge-off from your credit report is to wait the seven-year period or negotiate with the creditor to have it removed after you pay the account in full.
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