The term charge-off can be confusing. It does not describe, as some people believe, a debt that you no longer owe. Instead, when you miss payments and default on a debt obligation, the creditor may write off the debt as a loss for tax purposes. This is called a profit and loss charge-off. At this point, your creditor may report the status of your account as “charged-off” to the credit bureaus, which, in turn, will likely add the charge-off notations to your credit reports. That’s typically not good for your credit scores or for future financing applications. Your original creditor may even opt to sell or consign your debt to a third-party debt collector (aka a collection agency) or debt buyer. Once this occurs, both the original account and the new collection account may appear on your credit reports. Of course, even though charged-off accounts and collections can appear on credit reports, data furnishers (i.e. banks, collection agencies, credit card issuers) must follow the rules set forth in the FCRA. One important rule is that for a charge-off to remain on your credit reports, the reporting needs represent accurate information.