A charge off is when your credit card company gives up trying to collect money you owe and closes your account

When you stop paying your credit card bill for around 180 days (six months), the card issuer writes off the debt as a loss on their books. This is called a charge off. It does not mean the debt disappears — you still legally owe the money. What it means is the bank has decided to stop actively pursuing collection and has reported the account to the credit bureaus as severely delinquent.

A charge off is one of the most damaging things that can happen to your credit report. It signals to future lenders that you stopped paying an obligation, and it stays on your credit report for seven years from the date you first missed a payment — not from the charge-off date itself.

The card company may still try to collect the debt themselves, sell it to a debt collector, or sue you. A charge off does not protect you from legal action or collection calls. It only means the original creditor has written it off as a business loss.

Key Takeaways

  • A charge off happens after roughly 180 days of missed payments and means the card issuer has stopped trying to collect and reported you to credit bureaus.
  • You still legally owe the debt after a charge off, and the company can still sue you, sell the debt to collectors, or pursue other collection methods.
  • A charge off damages your credit score significantly and remains on your report for seven years from the first missed payment date.
  • Settling a charged-off debt for less than you owe can stop collection efforts, but the account will still show as charged off on your credit report.
  • If you are behind on payments but have not yet reached 180 days, contacting your card issuer to discuss hardship options may prevent a charge off.

How the charge-off timeline works

The clock starts the moment you miss a payment. Most card issuers report you as 30 days late after your first missed payment, then 60 days late, then 90 days late, and so on. At 120 days past due, your account is considered seriously delinquent. At around 180 days (six months), the card company typically charges off the account.

The exact timing varies by card issuer and state law, but 180 days is the standard threshold. Some companies charge off at 150 days; others wait closer to 210 days. Once the charge off is reported to the credit bureaus, it becomes part of your permanent credit history for seven years.

The seven-year clock runs from the date of your first missed payment, not from the charge-off date. This means even if your account is charged off in month six, the negative mark will not fall off your report until seven years after month one.

The difference between a charge off and debt collection

A charge off and debt collection are related but separate events. The charge off is the card issuer's internal decision to stop trying to collect. Debt collection is what happens next — the company may hire a third-party collector or sell the debt to a collection agency.

When a debt is sold to a collector, you may start receiving calls and letters from a new company. That collector now owns the right to pursue you for payment. They can sue you, garnish your wages (depending on state law), or place a lien against your property. The original card company is usually out of the picture at this point, though they still report the charge off to the credit bureaus.

Some charged-off debts are never sold and simply sit on the card issuer's books as a loss. Others are sold within weeks. There is no way to predict which will happen to your account, so you should assume any charged-off debt could be pursued by a collector at any time.

How a charge off affects your credit score

A charge off causes immediate and severe damage to your credit score. The exact impact depends on your starting score and credit history, but most people see a drop of 100 to 150 points or more. Someone with a score of 750 might drop to 600 or lower. Someone already at 600 might fall to 450.

The damage comes from multiple angles. First, the account itself is marked as charged off, which tells lenders you did not pay. Second, you have a long string of late payments (30, 60, 90, 120, 150, 180 days) leading up to the charge off, and each one is recorded. Third, your payment history makes up 35 percent of your credit score, so missing six months of payments hits hard.

The good news is that the impact lessens over time. A charge off from two years ago hurts less than one from two months ago. After seven years, it falls off your report entirely. However, during those seven years, it will make it harder to get approved for new credit cards, loans, or mortgages, and any approval you do receive will likely come with higher interest rates.

What happens if you settle a charged-off debt

You can negotiate with the card issuer or a debt collector to settle the charged-off debt for less than you owe. For example, if you owe $5,000, you might offer $2,500 to close the account. If they accept, you pay the settlement amount and the debt is resolved.

Settling stops collection efforts and prevents a lawsuit (if one has not already been filed). However, settling does not remove the charge off from your credit report. The account will still show as charged off, though it may be updated to show "settled" or "paid" alongside the charge-off notation. This is still negative, but slightly less damaging than an unpaid charge off.

Before you settle, get the agreement in writing. The collector should agree to stop contacting you, remove the debt from their active collection list, and confirm the settlement amount. Some collectors will also agree to remove the account from your credit report in exchange for a higher settlement, though this is rare and should be requested in writing before you pay.

Steps to take if you are approaching a charge off

If you are behind on payments but have not yet reached 180 days, contact your card issuer immediately. Explain your situation honestly — job loss, medical emergency, divorce, or other hardship. Many card companies have hardship programs that can lower your interest rate, reduce your monthly payment, or temporarily pause payments while you get back on your feet.

These programs are not may provide, and they vary by card issuer. Some companies offer them readily; others rarely do. But if you do not ask, you will not get one. The key is to call before the charge off happens, not after. Once the account is charged off, the card issuer has already decided to stop working with you.

If you cannot afford the full payment, offer what you can. Paying something — even $50 or $100 — shows good faith and may convince the company to work with you instead of charging off. If you truly cannot pay anything right now, ask about deferment or forbearance options. These pause your account temporarily and give you time to recover.

Rebuilding credit after a charge off

A charge off does not mean your credit is ruined forever. You can rebuild, but it takes time and consistent effort. Start by making sure all your other accounts are current. Do not miss any more payments. One charge off is bad; two or three is much worse.

Consider getting a secured credit card — one that requires a cash deposit as collateral. Use it for small purchases and pay the full balance every month. This shows lenders you can handle credit responsibly, even with a charge off on your report. After 12 to 24 months of perfect payment history, you may be able to move to an unsecured card.

Check your credit report for errors. You can get a free report from each of the three major bureaus (Equifax, Experian, and TransUnion) once per year at annualcreditreport.com. If the charge off is reported incorrectly — wrong amount, wrong date, or not yours at all — dispute it with the bureau. Errors can be removed.

Frequently Asked Questions

Can I get a loan or credit card after a charge off?

Yes, but it will be harder and more expensive. Most mainstream lenders will deny you for several years after a charge off. Secured cards, credit-builder loans, and subprime lenders may work with you, but they charge higher interest rates and require deposits or collateral. After three to five years of clean payment history, mainstream lenders become more willing to work with you again.

Will the debt collector go away if I ignore them?

No. Ignoring a collector does not make the debt disappear. They can continue calling and writing, and they can sue you. The statute of limitations (the time limit for suing) varies by state and type of debt, typically ranging from three to six years. After that period expires, they cannot sue, but they can still call and attempt collection.

Does paying off a charge off remove it from my credit report?

Paying off a charged-off debt stops collection efforts and may update the account to show "paid," but it does not remove the charge off itself. The account will still appear on your report for seven years from the first missed payment. However, a paid charge off looks better to lenders than an unpaid one.

What is the difference between a charge off and a write-off?

These terms are often used interchangeably, but technically a charge off is the creditor's accounting action, while a write-off is the tax deduction they claim. Both refer to the same event: the creditor giving up on collecting and reporting the debt as a loss. From your perspective as the borrower, they mean the same thing.

Can a charge off be removed from my credit report early?

Not by the credit bureaus — it must stay for seven years. However, you can try negotiating with the collector or original creditor to remove it in exchange for payment. This is rare and usually only happens if you settle for a significant amount. Get any removal agreement in writing before you pay.