Definition
When a lender writes off a debt as unlikely to be collected, usually after months of missed payments; you still owe it.
What it means
A charge-off is an accounting step a lender takes after a borrower has not paid for a long time, often about 180 days for credit cards. The lender records the debt as a loss, but the debt does not go away: the lender may keep trying to collect, sue, or sell the account to a debt buyer. A charge-off is a serious negative item on your credit report and can stay for seven years from the date of the first missed payment that led to it, even if you later pay it. Paying or settling the account can change its status to paid or settled, which some lenders view more favorably. If a forgiven amount is $600 or more, the creditor may send Form 1099-C, and canceled debt can be taxable unless an exception applies.
Example
A card with a $3,000 balance unpaid for six months is charged off and sold to a debt buyer. Settling it for $1,800 may lead to a Form 1099-C for the $1,200 that was forgiven.
Illustrative numbers only. Your situation will differ.