Here's Who We Are

We're Fund Virtually Everything

We fund business owners nationwide, regardless of industry, credit, or time in business. We fund it all.

Apply Now

We Provide Multiple Options

We have a lot of different financing options available to our clients. Regardless of your situation, we’ll have a solution for you.

Fast Approval

Our application process is completely online. You can get funds in your bank account in literally 24 hours.

The Working Capital You Need In 24 Hours.

We get you funding. It's that simple. Regardless of credit, income, or time in business - we'll fund you.


Use our online form or call toll-free anytime to get started. There's no cost, and the application takes only three minutes.


Receive application approval in as little as 24 hours. There is no credit check required.

Receive Funds

Review and return your signed agreement and get your money in as little as 24 hours.

Recent Business Loans Funded

100K Term Loan

Ambulance Service

Our client bought a new ambulance.
2019 - June
55K Advance

Truck Funded

Our client used the funds to hire new team members.
2019 - February
85K Term Loan

Restaurant Funded

Our client used the funds for restaurant equipment.
2019 - May

Get a Decision in as Little As 30 Seconds

We’re Fast. We Help Regardless of Credit. WE HAVE A SOLUTION FOR YOU.

Apply Online

We have a completely online application process, which is simple and easy.

Get Offers

We'll match you with the best loan offers we have that are financially responsible.

Get Funded Quickly

We'll fund you the same day you accept our offer.

How Delancey Street Works

Fill Out Our Application

Answer basic questions about yourself and fill out our entirely online application. Each loan has its own online process.

Meet Your Concierge

We'll pair you with an experienced Delancey Street specialist who will reach out to you, and understand your needs. We'll try to determine which financial product is right for you.

Compare Our Loan Offers

We give you a few different loan offers based on your scenario and what options you qualify for.

Choose Your Loan

Once you've chosen a loan that works for you, we finalize it and start getting the documents needed.

Get Funded

Once we get all of the documents back, we'll get you funded ASAP.

We Help You Grow

After you get funded, your Delancey Street concierge specialist will keep in touch to make sure you're happy and doing well.

Business Loans

Get business loans ranging from 3 months to 18 months
No credit score requirement, we have a program for everyone
We can fund up to $5 million in virtually 24 hours

Charged Off As Bad Debt What Does It Mean


Charged Off As Bad Debt: What It Means and What To Do

Seeing an account or debt listed as “charged off” on your credit report can be alarming. It sounds quite negative and final. But what exactly does this status mean? And what, if anything, should you do about charged off debts? This guide covers everything you need to know about handling debts charged off as losses by lenders.

An Overview of Charge Offs

When a lender determines they are unlikely to be repaid on a debt, they will “charge it off”. This means taking it off their books as a loss, while still retaining the legal right to pursue collection. Common scenarios leading to charge offs include:

  • The borrower has missed many months of payments.
  • The account has gone into default status.
  • The lender deems the debtor is unable to pay due to financial difficulties.
  • Bankruptcy filing by the borrower.
  • Statute of limitations expiring, limiting collection options.

The charge off removes the debt as an asset from the lender’s financial statements. But they can still attempt to recover what’s owed through means like selling it to collections or suing.

How Charge Offs Impact Your Credit Score

A charge off represents a serious negative status on your credit report. It will drag down your credit score substantially. The FICO model penalizes charge offs severely for up to 7 years from the date of first delinquency.

One charge off can easily drop your score by 100+ points. Multiple charge offs indicate serious financial troubles and can cause a score drop of 200+ points, if you even have a score at all anymore.

This major damage to your credit makes it difficult to qualify for loans, credit cards, rentals, insurance policies, and other items that require good credit.

You Still Owe the Debt

Importantly, charging off a debt does NOT eliminate the legal obligation to pay it. The lender writes it off for accounting purposes only. You remain on the hook for making payment on the full amount.

Debts can be charged off even before the statute of limitations for suing to collect has expired. Charge off and statute of limitations are separate concepts.

What Changes After Charge Off

Charge off alters collection activities, tax implications, and options available:

  • The original lender assigns or sells the debt to collections to recover what they can. Expect contact from collectors.
  • If the debt is not exempt, you may have to pay income tax on the discharged amount. An IRS 1099-C form reports it.
  • Options like settling for less than full balance become possible when the lender just wants something rather than nothing.
  • The lender cannot continue to charge interest or fees after charging off the balance.
  • Credit repair is difficult but possible over time by disputing errors and developing good new credit.

So a charge off should prompt you to examine the debt details closely and decide your optimal responses.

Your Options When Dealing with Charge Offs

Here are strategic choices for managing debts discharged as losses by creditors:

Pay in Full

If possible, paying the charge off in full prevents further credit damage, collection hassles, and taxes on canceled debt. But often borrowers facing charge offs lack the funds for this option.

Settle for Less

After charge off, lenders often accept 30-50% of the balance as a settlement. Get any offer in writing prior to paying. Settling avoids legal action but won’t improve your credit.

Dispute Errors

If the charge off information is inaccurate per your records, file disputes to seek removal or correction. Success depends on having proof of errors.

Request Debt Validation

When contacted by collectors, request written debt validation per your rights under the FDCPA. Cease collection if they cannot prove what is owed.

File Bankruptcy

For multiple severe charge offs where you simply cannot pay, bankruptcy may be an option to discharge the debts legally. Consult an attorney.

Wait Out Statute of Limitations

If the statute will expire soon, laying low until it passes then disputing any negative credit reporting often makes the debts uncollectible.

Evaluate these options objectively to choose your best course of action according to your specific situation.

Steps to Take After Charge Off

Upon receiving notice of charge offs, prioritize these damage control actions:

  • Pull your credit reports to review the negative item details. Correct any errors.
  • Research options for handling the debt – pay, settle, bankruptcy, dispute, wait for statute, etc.
  • If settling, get the offer in writing first and keep records of payment.
  • Follow up to ensure the creditor updates your status after settling or paying.
  • Prepare for the tax implications if you receive a 1099-C form reporting discharged debt.
  • Begin repairing your credit by adding new positive accounts and keeping payments current.

Don’t Ignore Charge Offs

While upsetting, charge off status should not cause despair. Handle the situation proactively, and the damage can be contained. With patience and diligence, even severely impacted credit scores can recover substantially over time.

Charge off often represents the beginning of the end of a debt nightmare. Now you have the knowledge to manage the fallout properly and move forward. Don’t bury your head or panic. Just focus on each step of the process within your control.

Key Takeaways

  • Charge off removes a debt as an asset but responsibility remains
  • Credit score damage can be 100+ points or more
  • Post-charge off options include pay, settle, bankruptcy, dispute
  • Important to request validation from any collectors
  • Credit repair is challenging but very possible
  • With the right plan, charge offs do not need to ruin your finances

Don’t let charge off status intimidate or overwhelm you. By understanding what it really signifies and strategically taking action, you can mitigate the impact and recover.

Helpful Resources

Don’t let charge offs ruin your finances. Knowledge of your options empowers you to take control of the situation.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
$125,000 Small Business Loan
"Thanks for funding me in literally 24 hours"
$35,000 Lawsuit Advance
"Great choice for first time fix and flippers"
$250,000 Hard money Loan

In The Media

Delancey Street CEO discusses ways to reward employees
Delancey Street CEO discusses the benefits of franchising on Forbes.
Delancey Street CEO discusses management on AMEX.
Get Out of Debt
Credit Card Debt Relief
Marital Debt Relief

Managing Marital Debt: Strategies for Financial Freedom Marriage can be…

Private Student Loan Debt Relief

Managing Private Student Loan Debt: Options for Relief Private student…

Veteran Debt Relief

Helping Veterans Find Financial Freedom Being a veteran comes with…

Delancey Street understands funding like no one else!
Steven Norris
Get Funding Today

Ready To Get Started?

If you have questions, feel free to shoot us an email, or fill out our live chat.

Apply Now