Charge-Off

Charge-Off

A charge-off does not mean a debt is forgiven. When a debtor stops paying on a debt, a creditor will attempt to contact the debtor on the telephone and via the mail. When the number of days since the most recent payment reaches 120-180 days, the account is no longer considered current and the creditor is required by generally accepted accounting principles and federal guidelines to charge-off the debt. Charging-off a debt does not mean the debtor is no longer responsible for the debt, or that collection efforts cease. The charge-off date has almost nothing to do with the statute of limitations for debts or when a debt must be removed from a credit report. At the charge-off point, the creditor will transfer the debt to a late-accounts department, or has the option to sell the debt to a collection agent. The creditor is not obligated to notify the debtor the account is charged-off. The collection agent will buy the debt at a discount. However, the collection agent has the right to collect the entire balance due plus interest. Charge-off is sometimes called write-off.

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