A charge-off is how a lender records an unpaid account as a loss, usually after about 180 days. You still owe the balance. The account can be collected, sold or sued on, and the entry can stay on your credit report for up to seven years.
An accounting step, not a pardon
Banks must recognize losses on accounts that are far behind, and credit cards are commonly charged off around 180 days past due. That changes the bank's books, not your obligation. Depending on the contract, interest and fees may keep adding up.
Where the account goes after that
- The bank collects it in-house, or places it with a collection agency.
- Or the account is sold to a debt buyer, which collects in its own name.
- A collector's first notice gives you a window to dispute.
- If it stays unpaid, a lawsuit is possible. In California you generally have 30 days after service to respond.
Two separate clocks
Credit reporting: under the Fair Credit Reporting Act, most negative items can be reported for up to seven years (15 U.S.C. §1681c), counted from the first delinquency that led to the charge-off.
Lawsuit time limit: for many written-contract debts in California, four years (CCP §337). The start date depends on the account history.
One clock running out does not end the other.
How the entry changes if you pay or settle
The status may move from "Charged off" to "Settled" or "Paid charge-off". The charge-off history usually stays until it ages off. Line-by-line help is in reading your credit report.
Frequently asked questions
Do I still owe a charged-off debt?
Yes, until it is paid, settled or legally discharged.
How long does a charge-off stay on my report?
Up to seven years from the first delinquency that led to it.
Can a charged-off account be sold?
Yes. A sale changes who collects, not whether the debt exists.
Will paying remove the charge-off?
Usually not. The status updates to paid or settled, and the entry ages off on schedule.