What is Charged-Off Credit Card Debt?

Are you currently receiving frequent calls, text messages, and emails from debt collectors attempting to collect past-due credit card debt? If you are in this situation, you are one of thousands of Americans who find themselves in the same circumstances. According to data from Marketplace, last year Americans defaulted on a total of $59 billion in credit card debt. In general, you are considered to be in default if you are more than 180 days late making at least the minimum payment on your credit card. Sometimes, when a debtor owes credit card debt and has not taken steps to make the minimum payment or to seek other forms of debt relief, the debt may be “charged-off” by the creditor. But is a charge-off a good thing or a bad thing?

Our Norcross, Georgia credit card debt lawyers can tell you more about charged-off debt and your options for debt relief when you are struggling to pay down your credit card balances.

What Does It Mean When Your Credit Card Debt is Charged-Off? 

A charge-off, or a situation in which your credit card debt is charged-off, “simply means a creditor has given up on collecting an unpaid balance and it has written off the debt as a loss,” according to Experian. Typically, a charge-off will not occur until a debt is delinquent, which typically means at least 180 days late, but sometimes a creditor can charge-off a debt when it is past-due by a shorter amount of time. Usually charge-offs do not start until a debtor is at least 120 days late making the minimum payment on a credit card.

In short, when a creditor lists a debt as being a charge-off, it is indicating to credit reporting bureaus that it is no longer attempting to collect the debt. However, this is typically when contact from debt collectors begins since the debtor still owes the debt.

You Can Face Legal Action for Charged-Off Debt 

Just because a debt is charged-off does not mean that you are no longer liable for it. The opposite is true, in fact. Debt collectors can continue to take actions to collect charged-off debt because you still owe it legally.

In addition to the effects that charged-off debt and collection entries will have on your credit report, you can also face legal action from debt collectors. For instance, you could be sued to collect the debt. If a debt collector wins a judgment against you, your wages could be garnished or a lien could be placed on your property. You want to avoid a charged-off debt. Rather than going through the process that typically follows from a charged-off debt, you may be able to negotiate a settlement amount with the creditor. By settling the debt, the creditor can receive some of what they owe and can forgive the remaining amount — you will no longer be liable for the debt when a debt settlement is negotiated and agreed upon.

Contact a Norcross Credit Card Debt Lawyer 

Do you have questions about managing credit card debt in Georgia, or taking certain steps to avoid a charge-off that may have a substantial impact on your credit? While debt settlement can still have an effect on a debtor’s credit score, the impact is much more limited than you might expect. Further, debt settlement gives you a way to get a fresh start so that you no longer have to worry about the debt. An experienced Norcross debt settlement attorney at Konn Law Firm LLC can speak with you today about options for handling your credit card debt and the possibility of negotiating a debt settlement agreement.

Sources:

experian.com/blogs/ask-experian/what-is-a-charge-off/

marketplace.org/story/2025/03/11/more-americans-are-defaulting-on-credit-card-debt-study-finds