Charge off is a banking term. It is a declaration by the creditor for the credit card account to give up the collection of wrong debt. Creditors usually make this declaration at the point of six month without payment. It will charge off the debt and sell it to the third party.
This declaration gives the bank a tax exemption. In case of wrong credit card bill, the creditor attempts to collect the debt before determining that the debt is to be written off. The creditor is allowed to deduct any charged off debts from its profits which mean it pays less income tax because of the lost profit directly related to those debts.
A charge off adds negative impact on the creditors history. It is worst because the person will not be able to get mortgage, car loan, and credit card approval. If the credit card account is charged off, it will be sold at bid agency for thirty cent. And if it is unsuccessful in collecting the debt it will be sold to another agency at ten cent. Debtors are less interested in paying for old debts. And once the debtor reaches to the situation of limitation, there will be no legal obligation to pay. One thing which is important to know is that every agency will place a negative mark on the creditor credit report. Though, if collection agencies should remove a credit report charge off mark once they sell a debt.

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