Definition
A charge-off is the point at which a creditor declares a delinquent receivable uncollectible for accounting purposes and removes it from its books as a loss. Federal regulators require banks to charge off open-end credit at 180 days past due and closed-end loans at 120 days. The charge-off does not forgive the debt; the consumer still owes it, and the creditor may continue collecting, place it with an agency, or sell it to a debt buyer.
Charge-off is a significant negative event on a consumer's credit report and is the point where many portfolios transition from first-party to third-party collection. Recovery rates on charged-off debt are far lower than on early-stage delinquency, which is why pre-charge-off intervention matters.
Example
A $3,000 credit card balance reaches 180 days past due. The issuer charges it off, reports it to the bureaus, and places it with a collection agency. The agency recovers $420 over the next year and keeps 35%.
How HL Hunt handles it
HL Hunt works accounts from the first missed payment, so fewer reach charge-off; collectability scoring identifies which pre-charge-off accounts are at risk; and for charged-off portfolios, the platform recovers at roughly 2x to 3x agency rates with commission as low as 3%.