Do You Have to Pay a Credit Card Charge-Off?

Know how it will affect your credit

Photo of a man going through financial problems

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Like most well-intending credit card users who get a little behind, you probably didn't mean for your account to become charged off. You may not have even realized that a charge-off is something that can happen to your account.

Here's how it happens: after missing six payments in a row, credit card issuers declare a delinquent account "charged off." Unfortunately, by the time you're that far behind on your payments, it's far more difficult to get your account caught up again.

What Exactly Is a Charge-Off?

If you haven't made a minimum payment for more than 180 days, your lender will likely consider your account a charge-off, essentially declaring it's no longer an asset. When creditors charge off accounts, they're marking it as a loss and writing it off on their own accounting books. As a result, the creditor might owe the federal government a little less.

Many consumers have the misconception that a charge-off means they no longer owe the balance. Your account will be closed and interest will stop accruing on your balance, and you won't be able to make new purchases on the account. This doesn't mean you're off the hook for what you owe, though.

Do You Still Have to Pay a Charged-Off Credit Card?

Even though the credit card issuer has declared a loss on your account, you're still responsible for repaying the debt. The creditor can (and probably will) still attempt to collect the debt and might even assign or sell the debt to a third-party debt collector who will pick up the collection activities.

Rather than having the convenience of paying your balance over time, the full balance of the charge-off is due. You may be able to negotiate with the creditor for a short-term installment plan, but this is ultimately at the creditor's (or the collection agency's) discretion. It all depends on how likely they think they are to get the full amount from you.


You won't be responsible for paying a charge-off if the debt is discharged in bankruptcy or the creditor cancels the debt.

What If You Don't Pay Your Charge-Off?

If you choose not to pay the charge-off, it will continue to be listed as an outstanding debt on your credit report. As long as the charge-off remains unpaid, you may have trouble getting approved for credit cards, loans, and other credit-based services (like an apartment.

The creditor or the assigned debt collector can pursue you for an unpaid charge-off indefinitely. They can do this by calling, sending letters, and updating your credit report. As long as the debt is within your state's statute of limitations, they can even sue you for the debt.

Settlement Option

Depending on the age of the charge-off, you may be able to negotiate a lower lump sum payment to satisfy your obligation. This is called settling the debt. The creditor may agree—but is not required to do so—to accept a fraction of the outstanding balance and cancel the remainder. This negotiation process can be quite time consuming, and there are no guarantees.

How a Charge-Off Affects Your Credit

Your creditor will report the amount and the charge-off status to the credit bureaus, and they will include it on your credit report. The charge-off status will remain on your credit report for the full credit reporting time limit (which is seven years from the date of the charge-off), whether or not you pay it off. Note, however, that you technically still owe the charge-off even after it's aged off your credit report.


You can dispute a charge-off from your credit report if it's an error or inaccurately reported.

Even paying the charge-off won't remove the account from your credit report or erase the previous charge-off status. After paying in full, your account will reflect a zero balance. While paying the charge-off doesn't immediately help your credit score, it does make you look better in the eyes of potential creditors and lenders, making them more likely to approve future applications.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Equifax. "What Is a Charge-Off?"

  2. United States Courts. "Discharge in Bankruptcy—Bankruptcy Basics."

  3. Consumer Financial Protection Bureau. "My Debt is Several Years Old. Can Debt Collectors Still Collect?"

  4. Federal Trade Commission. "Fair Credit Reporting Act § 605. Requirements Relating to Information Contained in Consumer Reports." Pages 22-23.

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