When a credit card balance is charged off, it means that the credit card company has decided to no longer actively pursue payment for the debt. A charge off is not something that cardholders can necessarily request, and it also does not mean that the borrower no longer owes the money.
When a credit card account falls into delinquent status as a result of payments not being made, the credit card company typically attempts to contact the cardholder. Most credit card companies understand that not everyone who is late on a credit card account payment is doing it intentionally; mail gets lost, automatic withdrawals get accidentally canceled, and sometimes a payment is simply forgotten. When a representative gets in contact with the accountholder and a payment is not made, or the accountholder cannot be reached for whatever reason, the credit card company will continue to try to get in contact with the delinquent cardholder in an attempt to collect payment and bring the account back up to date.
Eventually the responsibility of collecting the delinquent debt will fall into the hands of a collection specialist, either in-house with the credit card company or through a third party collection agency. Even if a debt is a month or two behind, there is usually still a chance to bring the card back up to date by making the overdue payments as well as any related fees due. After a debt has been delinquent for a few months, however, some cardholders prefer to wait and see if the account will be charged off by the credit card company instead of working out a new payment plan with the company.
Intentional Charge Offs
Creditors do not like to charge off debt, but there comes a time when even the lender has to acknowledge that some debts will simply never be paid. A charge off is different from bankruptcy, however, in the sense that a charged off debt can still be pursued. Some credit card companies sell their charged off debt to collection companies, which then become the legal owners of the debt and can then legally pursue payment. So while a credit card account might be charged off by a credit card company, a collection agency may renew efforts to get the money owed. In other words, a charge off status from the original creditor does not guarantee that the borrower will not be contacted in the future for payment.
Charge offs take time and occur after the creditor has made multiple attempts to compel the cardholder to make the payment necessary to bring the account back up to date, or to pay the amount owed after the account has been closed. Cardholders who want to intentionally have their accounts fall into charge off status must simply wait to see if the accounts do wind up charged off. This is not something that is negotiated with credit card companies. In fact, contacting a credit card company to ask if a delinquent account will soon be charged off may actually delay the account from going into charge off status because this contact with the creditor reestablishes contact after the company has been unable to reach the cardholder.
Getting a Charge Off
Not only does a charge off not guarantee that you will not be pursued for payment in the future, it also has the potential to lower your credit score substantially. Charge offs do not look good to prospective lenders because these items on your credit report basically tell the story that you gave up paying your bills and just walked away. While bankruptcy conveys the idea that you could not pay your bills, but you went through the proper legal steps to get a fresh start, charge offs tell the story that you disregarded your financial obligations altogether.
If your goal is to have a credit card account charged off, stop paying the bill and do not maintain contact with the lender. Keep in mind that this is not a good solution and that it is a much better idea to contact your lender directly and try to work out a new payment plan. Remember: a charge off does not release you of the legal obligation to pay your bills and it can have a significantly negative impact on your credit score.