Charge off vs Canellation

Chargeoffs are called that because a debtor's balance is "charged against a loss reserve", which is an accounting measure finance companies use to accrue anticipated bad debt over time. In its basic sense, the creditor knew you might not pay when they gave you money, and so they setup a loss reserve and accounted for your bad debt well before you were even delinquent. Then when you did stop paying, they charge the account against their loss reserve. It is a net effect on their balance sheets, not the income statement.

The "lost income" (rather bad debt expense) they show on their income statement isn't a sum of all the accounts they charge off. It's really more of a formula based on their entire portfolio, includingg historical performance, current trends and projected losses based on those factors. Like I said, they expensed your bad debt before you went "bad". But they don't directly writeoff the balance on your account.