What is Charged Off Debt?

Many times people will see that one or more of their debts is "charged off".

Charged off is an accounting term that means an account is no longer active. Often if you have not made payments on a particular account for six months, the creditor will "charge off" the account.  Frequently thereafter they will transfer the account to a collection agency or sell it to a debt buyer. 

Many people mistakenly believe a deb\t which is "charged off" is no longer owed.  Unfortunately, that is incorrect.   Debt collectors may try to collect a "charged off" debt even years after the original creditor designated the account as "charged off".

Accounts can get too old to collect -- which is called being barred by the statute of limitations.

If you are contacted regarding a charged off account, one thing to check is whether the statute of limitations prevents you from being sued on a time barred debt.