Can you sue or be sued on an account that has be “charged off”? To “charge off” is to treat an account “as a loss or expense because payment is unlikely.” Black’s Law Dictionary (10th ed. 2014). A charged-off account, in other words, is “bad debt.” Id. The practice of “charging off” is an accounting method the function of which is to adjust financial statements when the account appears to be uncollectible or at a point where the future collection efforts are not likely to recover a significant portion of the amount due after reflecting in the cost of collection. Charge office, often referred to as “write offs” typically happen when the account debtor is determined to be insolvent or unable to pay. Charging off an account does not mean that the account is “released” or not subject to suit, although limitations and economics – cost versus benefits – might dampen any desire to collect. See Long v. Turner, 134 F.3d 312, 317–18 (5th Cir. 1998) (recognizing a “charge-off” as an internal accounting matter that has no legal significance with respect to the collectability of the debt in general or the specific methods for doing so). If the borrower has been issued an IRS form 1099, this indicates forgiveness and the debt cannot be collected. Charge offs of uncollectible accounts may also be the subject of claims that management failed to exercise reasonable judgment and committed fraud in writing off what they perceive to be an uncollectible account in order to artificially inflate stock price. Evidence to this effect may include circumstantial evidence of ill motive including timing of the write-off, the percentage of the total reserves and net income, and executive’s close involvement with the decision-making process.