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Write-off
Also called charge-off, charged off, bad debt write-off.
A creditor's accounting decision to stop treating a balance as collectible on its books, which does not cancel the debt or release the borrower from owing it.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
It is an internal event driven by accounting and regulatory policy. The creditor removes the asset from its balance sheet or moves it to a loss category. Nothing about the borrower's obligation changes: the contract still stands, the guarantee still stands, the UCC filing is still of record, and the statute of limitations has not started running because of it.
What typically follows a write-off is more collection, not less. The balance goes to an internal recovery unit, to a third-party collection agency on contingency, or is sold to a debt buyer at a discount. The debt buyer paid pennies for it and has every incentive to pursue, sue and enforce — and it is now a party with no relationship to protect.
Cancellation is the different thing. Where a creditor actually forgives a debt, the amount forgiven may be reportable and may create taxable income for the borrower. A write-off is not a cancellation and does not carry that consequence, which is one reasonably reliable way to tell the two apart.
Where this one catches people
A borrower who hears "we have written it off" concludes it is over. It means the creditor has stopped expecting payment, not that it has stopped seeking it. The most common sequence is a written-off balance sold to a buyer who then sues on the original contract terms, including the personal guarantee, with default interest and fees accrued since the write-off. If a balance is genuinely being released, get a written release that says so and terminates the UCC.
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Write-off — common questions
What does write-off mean?
A creditor's accounting decision to stop treating a balance as collectible on its books, which does not cancel the debt or release the borrower from owing it.
Where does write-off catch people out?
A borrower who hears "we have written it off" concludes it is over. It means the creditor has stopped expecting payment, not that it has stopped seeking it. The most common sequence is a written-off balance sold to a buyer who then sues on the original contract terms, including the personal guarantee, with default interest and fees accrued since the write-off. If a balance is genuinely being released, get a written release that says so and terminates the UCC.
Is write-off the same as an interest rate?
Write-off is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does write-off apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit.
Is there a worked example of write-off?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside write-off?
Collections, Default, Personal guarantee, Settlement, UCC termination.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.