A term that describes when a creditor declares that a debt is unlikely to be collected, typically after nonpayment for 180 days. This allows the creditor to remove the debt from its balance sheet, but the debt doesn’t disappear. And the charge-off then is listed on the delinquent borrower’s credit report, where it will remain for seven years, lowering the person’s credit score and making major purchases difficult or impossible and in some cases affecting a person’s employment. The debt remains collectible as long as state laws allow. Creditors can continue to try to collect on their own via a lawsuit or internal collection departments, or they can sell the debt to a collection agency.