Time Frame

• Creditors will often stop allowing credit card use after 3 months of non-payment. A charge-off usually happens after 6 months of non-payment with collection attempts having been made.
  
  

Accounting

• A charge-off is a write-off on the debt owed. The concept of a charge off is an accounting remedy that shows the asset is no longer on the books - essentially assuming the debt will never be paid.
  
  

Money Still Owed

• Even though a charge-off has been placed on your credit, the creditor will continue to make collection attempts. A charge-off does not exonerate a person from the debt, like filing bankruptcy can.
  
  

Effect on Credit

• Not paying your debts will certainly affect your credit and not paying them to the point of a charge-off is certainly a negative credit mark. Though it shows bad financial judgment, it isn't the end of the world. There will still be many opportunities to pay the bill when finances turn around.
  
  

Opportunity to Negotiate

• When a charge-off has hit the books, this is a great opportunity to negotiate the debt with the creditor. The creditor can take the asset off the books, because it realizes the longer it takes to collect the debt, the less the company is likely to get. The company will probably now to be willing to negotiate to close the account out in the positive.