Credit Card Charge-Off vs. Credit Card Write-Off

by Mark Brinker

charge off vs write offA charge-off and a write-off sound a lot alike, but they are two very different things.


The term “charge-off” equates to when a credit card account reaches 180 days past due. At that point, the credit card company is required to reclassify the account for accounting purposes. Specifically, from a performing asset to a non-performing asset for the bank.

However, even though a credit card account has been reclassified as a charged off account, the credit card company still reserves the right to pursue collection of the outstanding balance.When a person hears the term “charge-off”, they often mistakenly think that they’re in the clear and that their debt will be forgiven. Not so. If only it were that easy. As mentioned above, a charge-off is simply a reclassification of the debt, and unfortunately you still owe the money even if the account has charged off.

Credit card companies handle charged off accounts in a variety of ways:

  • Sometimes the credit card company continues on with their own in-house collection efforts on the charged off account.
  • Sometimes they outsource the charged off account to a collection agency, but the credit card company still retains ownership of the account.
  • Sometimes the credit card company sells the charged off account to a debt purchaser. Just like mortgages are bought and sold all the time, so are credit card accounts.


A “write-off” on the other hand is when a creditor forgives a portion of the balance that is legitimately owed. For example, if you owe $15,000 and a creditor agrees to settle the account for $0.50 on the dollar, they write off $7,500.

Debt Collectors And Charge-Off

When an account charges off, the credit card company will place a derogatory mark on your credit report as a way of penalizing you for not paying as agreed. This is standard procedure.

When attempting to collect an outstanding debt prior to the charge-off point (i.e. 180 days) debt collectors often make a big deal about the “ramifications” of having a charge-off appear on your credit report. They often try to create the impression that you’ll be ruined financially if a charge-off shows up on your credit report.

Naturally if you have the ability to pay, then you should honor your obligations. But if you’re having financial difficulties and you just don’t have the money to pay, then you can’t pay. It’s that simple. If your credit report gets dinged in the process, so be it. Life will go on. It’s not the end of the world.

In summary, you don’t need to be intimidated by a debt collector threatening you with the “dreaded” charge-off on your credit report, because now you know that charge-off is merely a *reclassification* of the debt that signifies that an account is at least 180 days past due.


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