Charge-off
Asset-Backed Securities glossary · Cash Flow Waterfalls & Triggers
Definition
The write-off of an uncollectible receivable. Often synonymous with gross loss (before recoveries).
Charge-off in plain English
A charge-off is when a lender officially gives up on getting paid back on a loan and writes it off as a loss on its books. It doesn't mean the borrower is forgiven or that the lender stops trying to collect later — it just means the lender has stopped expecting the money and now counts it as gone. It's like finally admitting the $50 you lent a friend two years ago is never coming back and crossing it off your list. This number is usually the 'gross loss,' meaning it's counted before any money that might trickle in later from collections (recoveries).
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