A bad debt is an amount owed to a business or individual that is written off by the creditor as a loss (and classified as an expense) because the debt cannot be collected and all reasonable efforts to collect it have been exhausted. This usually occurs when the debtor has declared bankruptcy or the cost of pursuing further action in an attempt to collect the debt exceeds the debt itself.
The debt is immediately written off by crediting the debtor's account, eliminating any balance remaining there. The crediting represents a loss to the creditor.
Read more about Bad Debt: Doubtful Debt, Doubtful Debt Reserve, US Accounting Practice, Taxability, Mortgage Bad Debt
Famous quotes containing the words bad and/or debt:
“In our great concern about the mental health of children, however, we have overlooked the mental health of mothers. They have been led to believe that their children’s needs must not be frustrated, and therefore all of their own normal angers, the normal ambivalences of living, are not permissible. The mother who has “bad” feelings toward her child is a bad mother.”
—Elaine Heffner (20th century)
“However patriarchal the world, at home the child knows that his mother is the source of all power. The hand that rocks the cradle rules his world. . . . The son never forgets that he owes his life to his mother, not just the creation of it but the maintenance of it, and that he owes her a debt he cannot conceivably repay, but which she may call in at any time.”
—Frank Pittman (20th century)