When a company writes-off your debt because it does not believe you will pay the money you owe, it is a charge-off.
Even after that, however, you are still responsible to pay the debt you owe despite the debt charge-off.
A creditor or lender may apply a charge-off if you, as the borrower, have not paid the minimum balance for a long time.
Having a charge-off on your credit history can have serious repercussions on your future borrowing ability.
Charge-off debt could be sold to a collections agency or debt buyer, who will continue to make you pay the debt.
You will continue to owe the debt till it is paid off, settled, or discharged in a bankruptcy proceeding.
The creditor or lender usually waits 180 days or six months of non-repayment to deem the debt as a charge-off.
The consequence on your credit report is a drop in your credit score and difficulty in getting approval for future credit.
Consider paying down charge-off loans as soon as possible or negotiate with the lender to remove it from your report.