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Charge-off

A charge-off (or chargeoff, charge off) is the declaration by a creditor that a debt, typically a credit card account, is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will charge off an account when it has been delinquent for 180 days.

After an account is charged off, a creditor may still pursue payment by outsourcing it to a third party debt collection agency, selling the debt to a debt purchaser, or forwarding the account to an attorney to consider legal action. If the activity results in a recovered amount, it is added back to the creditor’s books. As such, most credit grantors report a “net charge-off” figure, which factors in recoveries after charge off.

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Chase Debt Collections Continue to Fall

JP Morgan Chase’s annual 10-K report to the SEC reveals some critical details about the mega-bank’s debt collection practices. In 2013, JP Morgan Chase recovered $593 million of charged-off credit card debts, continuing a three-year trend of anemic debt recovery. In 2010, the country’s biggest bank recovered $1.37 billion from unpaid credit card bills it had […]

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Hang-ups and Charge-offs: Experts Explain Debt Collection Compliance

Consumer protection attorneys are testing the argument that debt buyers who acquire charged-off consumer debt, and then “retroactively” charge interest on it, are in violation of the Fair Debt Collection Practices Act. This has sparked class action lawsuits across the country, particularly in Illinois, Kentucky and Ohio. So what should debt collectors do about this […]