Definition

• A charge-off occurs when a creditor transfers a delinquent account from its accounts receivable into the category of "bad debt," according to Bills.com. Most creditors charge off a debt within 240 days of the last payment on the account.
  
  

Repercussions

• Charge-offs have a severe impact on debtors' credit ratings. A charge-off remains on the debtor's credit record, according to MSN Money, unless the debtor takes steps to settle the old debt with the credit card issuer. In addition, the creditor may still pursue the debt even after charging it off, according to Bills.com.
  
  

Remedies

• In the past, debtors who tried to pay old charge-offs did more harm than good to their credit record because it made the old charge-off look like a recent issue, but according to MSM Money this action no longer penalizes debtors. Some debtors opt to simply let the charge-off expire from their credit report, after which their credit score rises.