What is a Charge-off?
Charge offs are credits that were previously carried as receivables on accounting records, but are now considered uncollectable for some reason. The purpose of the charge off is to allow a controlled procedure to take place that will exclude the inclusion of the uncollected credit when calculating the current balance in Accounts Receivable. Thus, a charge off is a simple write off that removes an item from the anticipated net income. The charge off does not mean that there will be no further attempt to collect the outstanding debt from the debtor. Rather, the use of a charge off simply means that the amount of the debt will no longer be reflected in the Accounts Receivable for the purpose of determining how much income remains to be collected from outstanding invoices issued to customers. Any invoice that is charged or written off the main section of the Receivables will still remain in the overall financial records of the company. Usually, the written off amount is referred to as bad
Charge off is an accounting term used by creditors when they consider a debt to be uncollectable. The debt is still legally valid and the creditor can attempt to collect the full amount. Charge offs are usually sent to collection agencies and handled by debt collectors. If you have charge offs on your credit reports, your ability to obtain credit will be seriously impaired. The best thing you can do is remove charge offs from your credit report.
A charged off account can be a delinquent or uncollected accounts that the credit extending company treats as a complete and total loss. These are frequently assigned to lawyers or collection agencies to attempt to collect. However, debt settlement is still possible and your rights to dispute are still intact.
