If you live in the United States and haven't paid off your debt for more than 180 days, the company that you owe has probably charged off or taken the debt off their balance sheet. However, a charge off doesn't mean that you don't have to pay the necessary amount. In truth, a debt is labeled as "charged off" simply because an accounting rule states that if a debt has not been paid in the specified 180 days, it is unlikely to be paid in the future as well.
The state law provides a statute of limitation for companies to collect the debt using the courts. Even though laws vary, most states don't allow creditors to sue an open-ended account after three to six years.
Another thing you should know is that after your original creditors have charged off the debt, they might contact a collection agency and sell the debt to them, after which it will be the responsibility of the agency to collect the amount due. If this were to happen, you would no longer owe the balance to the actual creditor, but to the collection agency. Therefore, you would be paying the debt to the collection agency, which will then update your account status to "Paid Collection".
If you are still doubtful on whether or not you should pay your debt, here are some things to consider:
If you are looking for a job, every company that is considering you for employment will do a background check and look at your credit report. Therefore, if you have a charged off debt that hasn't been paid, you will be seen as an unreliable person, which may result in you being left unemployed.
You may know that an unpaid debt will damage your credit score, but it can do a lot more harm than that. This unpaid charge off will also hurt you when you are renting an apartment or making a major purchase using credit. However, if you are able to pay your debts even after they have been charged off, many will overlook your previous history and appreciate the fact that you paid off the debt eventually.
On the other hand, you need to make sure that the debt is legitimate, that the collection agency has the legal right to collect that debt and is licensed to do so in your State. Keep in mind that paying the debt, for the most part will not positively affect your scores so negotiating with the collection agency for removal of the item from your report in exchange for payment will be very helpful.
Contact a credit professional before paying these types of debt in order to assure yourself of the best results.