When a creditor “charges-off” your debt, it means they’ve written it off as a loss. A creditor will charge-off your debt if they believe you no longer intend to pay. This usually happens once you’re behind on the payment by 90 to 180 days.
When your debt is charged-off, the creditor either transfers it to a collection department or sells it to a debt collector. Once the record of the charge-off appears on your credit reports, your credit scores are likely to take a big hit.
After the charge-off, you’re still legally obligated to pay the debt to the new account owner, but only for a set period of time determined by your state. This timeframe is also known as the statute of limitations. Before that time frame is up, the debt collector can potentially file a lawsuit against you in order to collect the debt.