A "charge off" occurs when a lender determines a debt will not be paid off. This allows them to remove the bad debt from their books. The lender typically then sends that debt to a collection agency who continues to try and obtain some or all of the monies owed.
Terminal Lease
A terminal lease is essentially a lease with a term or time limit. For instance, if you rent an apartment with a minimum guarantee of one year, the owner of the apartment can try and collect money if you leave before that term is up without paying. A terminal lease may also be used by businesses for equipment. An oil company might have a terminal lease on an oil rig someone else drilled.
Interest
Because the debt is still outstanding on a terminal lease, interest may continue to accrue even after the charge-off has occurred. The amount of interest and fees will be stated in the contract or might be governed by state law. For instance, if an owner fails to pay a balance due on a leased vehicle, the amount of interest they were paying per month may continue to accrue. If someone else was renting an apartment and left without paying, state law may give the landlord a provision as to how much interest he can charge.
Statute of Limitations
To guard against lenders and collection agencies relentlessly pursuing debts over an entire lifetime, states have passed laws which limit the time a lender may collect that debt. The time line varies by state and type of debt (consumer versus business, for instance.) Interest would stop accruing on the amount owed when the statute has been reached as the debt is no longer enforceable.
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