A charge off is an accounting entry used by creditors or lenders in their books to account for overdue, uncollected debts. Most debtors, when they see “charged off” on their credit report, assume the debt has been disregarded by the creditor and that they are no longer obliged to repay the debt. This is not correct. In fact, in many instances when one creditor charges off a problematic account, a third party purchases the bad debt and commence efforts to secure payment of the debt from the debtor.
A charge off will appear on the debtor’s credit report for years. And, if the creditor is able to obtain a legal judgment against the debtor for the unpaid debt, the judgment will remain on the debtor’s credit report for a minimum of seven years from the date the judgment was obtained.
The bottom line is there is no magic wand you can wave to erase your debts, and the longer you ignore them the worse it will be for you. If you are unable to meet your financial obligations, you may need to consider bankruptcy or other debt relief options.