A charge-off means a creditor has written the debt off an an uncollectible loss. A creditor can charge-off personal debt, such as an auto loan. It also ca charge-off business debts as well, such as an unpaid business credit card. Charged-off business debt may end up in the hands of a collection agency, and under certain circumstances, the agency may be able to collect on it.


If your business has outstanding debt, the creditor may charge off the debt once it becomes more than 150 days late, according to the website myFICO.com. By writing off the debt as a loss, the creditor can deduct that amount from its earnings. This may reduce the creditor's taxable income and therefore reduce the amount the creditor pays in taxes. A charge-off is an accounting procedure, however, and does not prevent the creditor, or collection agency, from pursuing you for its payment.

Collection Agency

Charged-off debt often is placed with a collection agency by the creditor. The creditor may hire the collection agency, which means the collection agency pursues the debt on behalf of the creditor. Alternatively, the creditor may sell the charged-off debt to the collection agency instead. The agency is now the owner of the debt and may come after you for it. The collection agency will generally call or write to you in an attempt to the collect the debt. If that proves unsuccessful, the agency may sue you in civil court as part of the collection process.


If you have unpaid charge-off debt from your business, it may prove beneficial to work out a payment agreement with the collection agency to prevent the collection process from escalating to legal action. If the collection agency sues you successfully and obtains a judgment, the agency can use that judgment to pursue your business assets . Business assets may include property that your business owns or funds from your business checking account. If you personally guaranteed the charged-off business debt, the agency may pursue your personal assets as well. The agency also can pursue personal assets if your business structure exposes you to personal liability for debts -- for example, if you operate as a sole proprietorship.


A collection agency can collect on charged-off debt but only for a limited amount of time. Each state has its own statute of limitations on debt. Once a debt ages beyond this time period, you're not legally responsible for payment of it. The statute of limitation applies to both personal and business debts. Some collection agencies will sue you for expired debt. If you fail to appear in court, the judge will issue a default judgment against you or your business. If you appear and inform the court that the debt is expired, the judge will dismiss the case.