A charged-off account is one your credit card company has written off as a loss after you stop paying for 120 to 180 days

When your credit card account is charged off, the card issuer has decided you are unlikely to pay and has removed the debt from their active accounts. This does not erase what you owe — it means the company has accepted the loss on their books and may sell the debt to a collection agency or pursue it through other means. The charge-off appears on your credit report and stays there for seven years from the date you first missed a payment, not from the charge-off date itself.

A charge-off typically happens after 120 to 180 days of consecutive missed payments. The exact timeline depends on your card issuer's policy. Once the account is charged off, the card is closed and you cannot use it. The issuer stops reporting monthly activity to the credit bureaus, but the charge-off record itself remains visible and damages your credit score significantly.

Charged-off debt does not disappear. You still legally owe the money. The card company can pursue collection through a debt collector, file a lawsuit against you, or attempt wage garnishment depending on your state's laws and the amount owed. Some issuers sell the debt to third-party collectors; others keep it in-house and pursue it themselves.

Key Takeaways

  • A charge-off occurs after 120 to 180 days of missed payments and means the card issuer has written off the debt as a loss on their financial statements.
  • The charge-off stays on your credit report for seven years from your first missed payment, significantly lowering your credit score.
  • Owing the debt does not end when an account is charged off — the issuer or a debt collector can still pursue collection or legal action.
  • Your card is closed immediately upon charge-off and cannot be used, and the issuer stops reporting monthly updates to credit bureaus.
  • Paying a charged-off debt does not remove it from your credit report, but it may improve your score slightly and stops collection efforts.

How the charge-off process unfolds

The path to a charge-off begins the moment you miss a payment. After 30 days late, the issuer reports the missed payment to the three major credit bureaus — Equifax, Experian, and TransUnion. Your credit score drops immediately. The card company also begins sending collection notices and may increase your interest rate to the default rate, which is often the highest rate allowed by your card's terms.

At 60 days late, the account is typically flagged as seriously delinquent. At 90 days late, most issuers have already assigned the account to an internal collections department or contacted you repeatedly by phone and mail. At 120 days late, the charge-off decision is made. Some issuers charge off at 180 days instead, but 120 days is more common. On the charge-off date, the account status changes to "charged off" on your credit report, the card is closed, and the issuer stops accepting payments through normal channels.

After charge-off, the debt may be sold to a third-party collection agency within weeks or months. When this happens, the collection agency becomes the party pursuing payment, though the original charge-off remains on your credit report. If the debt is not sold, the card issuer's internal collections team continues pursuing it. Either way, you may receive calls, letters, or legal notices demanding payment.

The impact on your credit score and report

A charge-off is one of the most damaging items on a credit report. Your score typically drops 100 to 150 points or more depending on your starting score and credit history. The damage is greatest if your score was already high; a person with a 750 score may drop to 600 or lower, while someone at 600 may drop to 500. The exact impact varies by scoring model and the other items on your report.

The charge-off appears in the "negative items" section of your credit report under the account that was charged off. It shows the original balance, the date of first delinquency, and the charge-off date. Lenders reviewing your report see this and interpret it as a sign you stopped paying a debt entirely. This makes it harder to obtain new credit, refinance existing debt, or secure favorable interest rates for years.

The charge-off remains on your credit report for seven years from the date of your first missed payment — not from the charge-off date. If you missed a payment on January 15, 2024, the charge-off will fall off your report on January 15, 2031, regardless of when the issuer formally charged it off. After seven years, the item is removed automatically and no longer affects your score.

Paying a charged-off account

Paying a charged-off debt does not remove it from your credit report. The charge-off record stays for the full seven years. However, paying does stop collection efforts, prevents lawsuits or wage garnishment, and may result in a slight score improvement because the account will show as "paid charge-off" instead of "unpaid charge-off." Lenders view a paid charge-off more favorably than an unpaid one, though both are serious negative marks.

Before paying, understand who you owe. If the debt was sold to a collection agency, paying the original card issuer will not satisfy the collector. You must pay the collector or negotiate directly with them. If the issuer kept the debt, you can pay them. Always request a written settlement agreement before paying a lump sum, specifying exactly what you are paying for and confirming that payment will resolve the debt.

Some charged-off accounts may be subject to a statute of limitations for collection, which varies by state and typically ranges from three to six years. After this period expires, a collector cannot sue you, though they may still contact you for payment. Paying a debt after the statute of limitations has expired can restart the clock in some states, so consult a local attorney before paying an old charge-off if collection efforts have stopped.

Charge-off versus settlement and other outcomes

A charge-off is different from a settlement. In a settlement, you and the creditor agree that you will pay less than the full balance owed, and the creditor accepts this reduced amount as full payment. A settlement is negotiated before charge-off occurs, though it can happen after. A charge-off is unilateral — the issuer decides to write off the debt without your agreement. Both appear on your credit report, but a settlement shows you reached an agreement, while a charge-off shows you stopped paying and the issuer gave up.

A charge-off is also different from a write-off for tax purposes. When an issuer charges off a debt, they may claim a tax deduction for the loss. This is an accounting action and does not affect your legal obligation to pay. You still owe the debt and can still be pursued for collection.

If you are behind on payments but not yet charged off, you have options: bring the account current by paying all missed payments plus any fees, request a hardship plan that lowers your payment temporarily, or negotiate a settlement before charge-off occurs. Once charged off, your options narrow to paying in full, negotiating a settlement with the collector or issuer, or waiting out the seven-year reporting period.

Collection activity after charge-off

After charge-off, collection activity intensifies. If the debt is sold to a collection agency, you will receive a notice from the collector within 30 days of the sale. This notice must include the original creditor's name, the amount owed, and your right to dispute the debt within 30 days. If you dispute the debt in writing within this window, the collector must verify the debt before continuing collection efforts.

Collectors can contact you by phone, mail, or email, but they cannot harass you, call before 8 a.m. or after 9 p.m., contact you at work if your employer prohibits it, or misrepresent the debt. If a collector violates these rules under the Fair Debt Collection Practices Act, you can file a complaint with the Consumer Financial Protection Bureau or sue the collector for damages. Documenting all contact — dates, times, what was said — helps if you need to prove violations.

If a collector or the original issuer files a lawsuit, you will receive a summons and complaint. You have a limited time to respond, usually 20 to 30 days depending on your state. Ignoring the lawsuit can result in a default judgment against you, which allows the creditor to pursue wage garnishment or bank account levies. If you receive a summons, contact a local attorney or your state bar association for a referral to a debt defense attorney.

Rebuilding credit after charge-off

Rebuilding your credit after a charge-off takes time, but it is possible. The charge-off's impact on your score decreases over time, especially as you build positive payment history on other accounts. Opening a secured credit card — one backed by a cash deposit — and making on-time payments for six to twelve months can begin to offset the damage. Paying down balances on other accounts also helps.

Disputing inaccurate information on your credit report can improve your score if the charge-off was reported incorrectly. You can obtain a free copy of your credit report from each bureau once per year at annualcreditreport.com. Review it for errors: wrong balance, wrong charge-off date, or accounts that are not yours. File a dispute with the bureau if you find errors, and the bureau must investigate within 30 days.

Paying the charged-off debt, if you can, shows future lenders you took responsibility. It does not remove the charge-off from your report, but it changes the status to "paid" and may help you may have access to for credit after a year or two. Focus on making all current payments on time going forward — this is the single most important factor in rebuilding your score.

Frequently Asked Questions

Can I still use my credit card after it is charged off?

No. The card is closed when the account is charged off, and you cannot make new purchases or access credit. You may still be able to make payments on the charged-off balance through the issuer or collector, but the card itself is no longer functional.

Will the charge-off disappear if I pay it off?

No. The charge-off remains on your credit report for seven years from your first missed payment. Paying it changes the status to "paid charge-off," which looks better to lenders than "unpaid charge-off," but the charge-off record itself does not disappear early.

Can I be sued for a charged-off credit card debt?

Yes. Charge-off does not prevent lawsuits. The issuer or a collection agency can file a lawsuit to recover the debt, and if they win, they can pursue wage garnishment or bank levies depending on your state's laws. Responding to a lawsuit is critical — ignoring it results in a default judgment against you.

What is the difference between a charge-off and a collection account?

A charge-off is the issuer's decision to write off the debt as a loss. A collection account is what appears on your report after a collector begins pursuing the debt. The same debt can be both charged off by the original issuer and in collection with a third party.

How long does a charge-off stay on my credit report?

Seven years from the date of your first missed payment. The charge-off is removed automatically after this period, even if you have not paid it. Paying before seven years does not remove it earlier, but it does change the status to "paid."