Credit card companies are required to write off a delinquent account after 180 days of missed payments. That is how long it takes before credit card debt is written off under federal banking rules. A write-off, also called a charge-off, is an accounting step: the bank moves your unpaid balance from an active asset to a documented loss on its books. It does not erase what you owe. You still owe the full balance, and the charge-off can sit on your credit report for roughly seven and a half years from the date you first fell behind.
Where the 180-Day Rule Comes From
The timeline is set by federal banking regulators through the Federal Financial Institutions Examination Council. Under the FFIEC’s Uniform Retail Credit Classification and Account Management Policy, banks and credit unions must charge off open-ended revolving credit accounts, including credit cards, once they reach 180 days of delinquency.1Federal Register. Uniform Retail Credit Classification and Account Management Policy The charge-off has to be completed no later than the end of the month in which the 180-day mark is reached.
The rule exists to keep bank balance sheets honest. Regulators do not want lenders counting severely delinquent accounts as expected income month after month. Once the bank writes the balance off, it becomes a business loss that offsets taxable income.
What Happens During the Six Months
The clock starts the day you miss a payment, not the day the bank sends the first past-due notice. Here is what usually happens along the way.
- 30 days: The account is one payment past due. The bank reports the delinquency to the credit bureaus and starts calling and mailing you.
- 60 days: The bank typically freezes the card so you cannot make new purchases. A second missed-payment notation appears on your credit report.
- 90 days: The account is treated as seriously delinquent. Internal collection calls become more aggressive, and your credit score drops sharply.
- 120 to 150 days: The lender prepares to charge off. Late fees keep accruing, and a penalty APR often in the range of 27 to 30 percent continues to run on the balance.
- 180 days: The bank is required to move the account off its active ledger and record the balance as a loss.1Federal Register. Uniform Retail Credit Classification and Account Management Policy
Late fees pile up throughout. Federal regulations set safe-harbor dollar caps on credit card late fees that are adjusted annually for inflation, and major issuers commonly charge the maximum allowed, which has run in the range of $30 to $41 depending on whether it is a first or repeat late payment.2Federal Register. Credit Card Penalty Fees (Regulation Z) Add the penalty APR, and the balance you owe when the account is written off is often meaningfully larger than what you originally charged.
You Still Owe the Money
The write-off changes how the bank accounts for your debt. It does not change your legal obligation. You still owe the full balance plus accrued interest and fees from your original cardholder agreement, and the creditor, or whoever now owns the debt, can pursue payment through letters, phone calls, or a lawsuit.
If a creditor sues and wins, the court enters a judgment. With a judgment in hand, the creditor gains stronger collection tools, including wage garnishment and property liens.3Consumer Financial Protection Bureau. Can a Debt Collector Take or Garnish My Wages or Benefits Judgments typically last ten or more years in most states and can often be renewed, so an unresolved balance can follow you for a long time.
What Happens After the Write-Off
Once the account is charged off, the bank usually stops sending monthly statements and hands the debt off in one of two ways. It may assign the account to a third-party collection agency that keeps a cut of what it recovers, or it may sell the debt outright to a debt buyer for a fraction of the balance. Either way, whoever ends up holding the account has the legal right to collect the full amount.
A sale does not change how much you owe. The buyer receives your account file, including the original agreement, payment history, and outstanding balance, and takes over contact with you. Once a third-party collector or debt buyer is involved, you gain specific protections under the Fair Debt Collection Practices Act, including the right to a written validation notice and the right to dispute the debt in writing within 30 days.4Office of the Law Revision Counsel. 15 U.S. Code 1692g – Validation of Debts These protections generally do not apply when the original credit card company is collecting its own debt.5Federal Trade Commission. Fair Debt Collection Practices Act
How Long the Write-Off Stays on Your Credit Report
Under the Fair Credit Reporting Act, a charged-off account can remain on your credit report for seven years.6Office of the Law Revision Counsel. 15 U.S. Code 1681c – Requirements Relating to Information Contained in Consumer Reports The seven-year clock does not start on the date of the charge-off itself. It starts 180 days after the date you first became delinquent and never brought the account current. In practice, the entry can appear for about seven and a half years from your first missed payment.
That starting date, called the date of first delinquency, is locked in. If the debt is later sold, the buyer cannot reset the clock by reporting a newer delinquency date. Once the reporting period runs out, the credit bureaus must remove the entry, and you can dispute it directly with the bureau if it lingers.
How Long You Can Be Sued Over the Debt
The credit-reporting window and the deadline to sue are two separate clocks. Every state has a statute of limitations that caps how long a creditor or collector can sue you for an unpaid credit card balance. Depending on the state, that period runs from three to ten years. After it expires, the debt is time-barred: a collector can no longer win a judgment against you, though some may still try to contact you about it.
Be careful about partial payments or written acknowledgments of an old debt. In many states, either can restart the statute of limitations and reopen the window for a lawsuit.7Consumer Financial Protection Bureau. Can Debt Collectors Collect a Debt That’s Several Years Old Because the two clocks run independently, a debt can drop off your credit report while still being within the window where a creditor can sue, or the other way around.
Settling a Written-Off Debt
Even after the write-off, you can often negotiate for less than the full balance. Creditors and debt buyers may accept a lump-sum payment of 50 to 70 cents on the dollar, sometimes less, because collecting something beats collecting nothing. The older the debt and the less likely the creditor thinks you will pay, the more room there tends to be.
Some consumers try to negotiate a pay-for-delete arrangement, offering payment in exchange for removing the charge-off from their credit report. Creditors rarely agree. The FCRA requires reported information to be accurate, and contracts between collectors and the credit bureaus generally prohibit removing entries that are truthful. Even after you pay in full, the charge-off notation usually stays on your report, updated to show a zero balance, until the reporting period ends.
The Tax Bill You May Not Expect
If a creditor cancels or settles your debt for less than the full amount and the forgiven portion is $600 or more, the creditor must file IRS Form 1099-C reporting the canceled amount.8Internal Revenue Service. Instructions for Forms 1099-A and 1099-C The IRS generally treats forgiven debt as taxable income, and you have to report it on the federal return for the year the cancellation occurred.9Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not If you owed $12,000 and settled for $5,000, the remaining $7,000 could show up as income on your return.
There is an important exception. If your total debts exceeded the fair market value of everything you owned at the time of the cancellation, you were insolvent, and you can exclude canceled debt from income up to the amount by which you were insolvent. You claim the exclusion by filing IRS Form 982 with your return.10Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments Many people carrying heavy credit card balances qualify without realizing it.