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If you have not made payments on a loan or credit card balance for more than 180 days, the lender may decide to "write-off" the charge. The lender then marks this on your credit report as "Written off." This is only an accounting process and does not let you off the hook from repaying the loan.

This will have some adverse effect on your credit score and reduce your chances of getting a loan or credit card because a lender may be hesitant to give you a loan or credit card if you haven't paid your EMIs on previous loans or credit cards.

When the lender determines that the particular debt has little or no chances of being collected, they take the decision to write it off as a loss. A debt write-off is essentially an accounting tool that allows the creditor to declare the debt worthless and deduct it as a loss.

How Long Does a Credit Card Company Usually Keep a Debt Before Writing It Off?

Most of the time, this occurs after you have not made any payments for at least six months. Each creditor, however, has a different method for deciding if a debt is uncollectible. As a result, the length of time it takes for your debt to be written off is determined by your credit card company, your assets, and your payment history.

Are You Still Liable For A Debt That Has Been Written Off?

Just because your lender writes off your debt doesn't mean you're out of the woods. A debt write-off does not eliminate your liability or duty to pay the debt. It is merely a method for lenders and banks to remove bad debts from their books. They will now forward the debt account to ‘Debt Collectors’, who will continue to contact you or sue you to recover the debt even though it has been written off.

Key Takeaways: 

Debt write-off means that the bank foresees less or nil chance of recovering the loan

Banks do this often, to remove some bad loans from their balance sheet

Banks anyways allocate a portion of the budget for bad loans

Bad debt doesn’t necessarily mean that the banks cannot attempt to recover the loans

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