The taking of a charge-off is an internal accounting measure that permits, and in some cases requires, the creditor to remove the debt from their accounting ledger as an account receivable asset, and move it to a non-asset (bad debt) column that is not included in the final calculation of their net assets. The primary purpose of charge-off regs is to prevent creditors from over stating their value to existing and potential shareholders and investors by including debts in their statement of assets that are not likely to ever be paid.
You need to consult an accountant for details on when a debt can or must be charged off under federal regs. The regs follow the general standard of when a debt is considered as unlikely to be paid, which is subjective. While the regs do provide general guidelines of approx 120 late for installment loans and 180 late for revolving debt as prima facie showing that the debt has become unlikely to be paid, creditors are permitted discretion in developing thier own criteria, and it is not per se impermissible to take a CO earlier than 180 late if it meets their internal established criteria. See sample regs at Fed Reg, Vol 65, No. 113, June 12, 2000 relating to taking of charge-offs, and consult an accountant for any revisions, state regs, or court interpretations.
As for reporting, a creditor is permitted, once they have taken a charge-off, to thereafter report the level of delinquency as either the standard days delinquent since billing due date, such as 150-late, or alternately as simply CO.
If a creditor has reported delinquency as CO, they are then required under FCRA 623(a)(5) to additionally report the date of first delinquency to the CRA, which is then used to determine the overall period of delinquency.
Creditors do NOT report the date that they took a charge-off. It is not needed by the CRA, and they have no code for storing that information. They are permitted, after taking a CO, to thereafter report either the current status as CO, or any prior monthly delinquency after they took the charge-off as simply CO. Reporting of CO for multiple months thus is not the reporting of multiple charge-offs, it is simply the reporting that, at some prior point in time, they took a CO, and the account continues to be delinquent.
As for required deletions based on a dispute, finding any inaccuracy is not basis for deletion of anything unless it cannot either be verified as accurate as reported or it cannot be corrected by the creditor to overcome an agreed inaccuracy. The creditor always has the ability to correct without there being any requirment to delete simply because the reporting was found inaccurate.
The incorrect reporting of a CO, or of balances thereunder, for example, does not require deletion of the CO or of the account. The creditor can always simply correct any agreed inaccuracy without any need to delete anything.
Thus, finding some inaccuracy will not compel deletion as long as the creditor updates their reporting to overcome the agreed inaccuracy.
