Charge-off is a type of a loss recorded by lending institutions (typically credit card companies) when, after a certain period of time, they record unpaid loan or credit as loss. Such accounts are then handed over to the collection department within the institution or other collection firms or attorneys.
A typical case of a charge-off may include collection from an account several years later unless the party was declared bankrupt. Traditionally, lenders have this practice to wait for around 6 months before charging off the account. In the United States this period is usually 120 days.