What is Charge off?

Most of us think that when a debt has been declared Charge off or pay off by the creditor, it has been canceled. But this assumption is totally wrong. In case of being "Charge Off", you will still have to pay the existing debt but will not be able to your credit cards for further purchasing.

Creditors and lenders have benefits and losses as well. They make money from profits and lose money from losses. When the creditor or lender has declared your account as "Charge off", it is declaring that your account is no longer an asset for it but it is a loss to the company.

Although the creditor has accepted you as a loss to its financial records, yet it will not let you get away free. It will add a negative entry to your credit report in the form of charge off and will keep on making efforts to collect the debt from you.

Any credit account is normally charged off after 6 months of less than minimum payment. The Charge off status remains in your credit report for the next seven years in normal cases. And in case you pay the debt, the status will be changed to “Charge off paid” or “Charge off settled”. Either of the situations is not desirable but is better than being Charge off.

To remove the charge of status from your credit report, you have to wait for the next seven years from the day of being charge off or make some settlement with your creditor to remove the “Charge off” status from your credit report after you have made the total payment.