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Bad Debt

Bad Debt questions and answers

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Q: How much does having bad debt effect getting a federal law enforcement commission?
I have some bad debt that I am trying to get cleared up. I'm now on a payment plan w/a debt management company, but wanted to know if they will take that into consideration when it's time to get my commission.

A: It will be taken into consideration because of the aspect of could you be bought off if someone payed your bills or you were on the take to pay bills and outstanding debt. You have taken a very wise approach of debt management company to acknowledge you HAD a problem and this is how they should Analise it HAD.

Q: What is the collection process of bad debt and next time how to recognise these kinds of people?
One of our co - worker cried about his family problems like mother's ill health, son's education etc etc and asked a good amunt of money as help on returnable basis. However, after getting his share of help, he became unresponsive and slowly it is turning into bad debt. The worry is the change in our perception to help other people bcos of his bad habit of not paying the dues on the time. Hence to safeguard self, this question. We have decided not to argue, ask and confront him.

A: How to collect? IMHO the best way is to take him to court. You'll have a stronger case if he signed a promissory note or similar written evidence of the debt. How to avoid in the future? Check people's credit, make them sign a promissory note with a specific repayment schedule, maybe get a cosigner or collateral. Or simply make a "no personal loans" rule. Or don't make personal "sympathy loans" unless you are willing to lose the entire amount.

Q: How do i settle a bad debt that has more than tripled since going into collection?
I have been in contact with the collection agency and they said they would settle the $18,000 debt for $11,000. I do not have $11,000 nor am i able to get a loan. Is working with a debt consolidater just as bad as filing for bankrupcy? I have a family and want to buy a house and this is the only thing standing in my way...what do i do?

A: Offer to make payments on the ORIGINAL amount, then do it. Don't pay any extra that has been added on by collection agencies. That isn't even legal. If you only owe one debt, don't go to a credit counseling agency. Doing so will lower your credit score. You should only go to credit counseling if you need them to keep your utilities from being shut off. .

Q: Can I remove a bad debt from my credit history if the responsibility belongs to my ex-spouse?
The mortgage on a house was in both of our names, but we both declared bankruptcy separately mine was a 7 his a 13. On our divorce decree it states that I have given up all rights to the property and it is his responsisbility. Will the company remove the bad debt from my credit history if I ask them?

A: Getting Equifax, transunion or Experian to remove a bad debt is extremely hard. I helped someone do it and it took them forever and lots of follow up calls to finally not completely remove it, but not count it against her credit score. You would have to send them a copy of your divorce which states that it was not your responsibility. You should contact the credit agency directly and open a case with them and they will walk you through the necessary paperwork they need. They might also need a letter from your ex husband stating the debt was his responsibility. Like i said, I helped someone do it and although it is very hard, it is still possible, especially if your divorce states you are not responsible. Good luck!

Q: How do I provide bad debt information to credit bureaus?
It has been ten years since I last reported a bad debt from a client to a credit reporting agency. At that time I simply wrote a letter and enclosed a $25.00 check to cover the fee. Looking over the websites now, I don't see things have changed but can't find the information I am lookfing for. Thank you!

A: Wow, I can't believe you had to pay to report a slow pay or no pay debtor. I used to get forms from Dun & Bradstreet (business to business info) and would simply fill-out the form and mail it to them. They were happy to receive the information from me on any potentially problematic accounts that I managed. Try calling the major credit reporting agencies and see if they will send you forms like D&B did for me.

Q: How do I write off a bad debt in a trial balance?
I am having difficulty making my trial balance balance. I have too many different things on my trial balance that are confusing me. I have lines for bad debts, provision for bad debts, bad debts written off and one for increase provision bad debt. i seem to have done what i was told to do but its not balancing, any help would be greatly appreciated.. I know all my figures are correct until the trial balance. the difference between my debit and credit accounts is double the figure that's the increase in the provision. but everytime i mess around with the adjustment figures and they balance the extended trial balance doesnt or vice versa.. arg

A: I think that you should have amongst the opening balances (dr column) bad debts account, showing total of bad debts already written off during the year. Debtors will have been reduced to take account of this, ie that is the credit entry. Also, on the credit side of the opening balances you should have the opening bad debt provision, which was created in the previous year. Now, if you are increasing the bad debt provision for the current year, you need to debit the P&L a/c with the increase, and extend the new total into the liabilities side of the balance sheet. I am not sure what you mean by 'I have lines for bad debts', do you mean in addition to bad debts written off. If you have bad debts that still need writing off, in addition to those already written off, then you need to reduce debtors in the balance sheet and add them to bad debts already written off. Your closing P&L a/c should show total bad debts w/o (dr entry). Increase in b/d provision ( dr P&L a/c ) The balance sheet will show as a liability, the total bad debt provision. This is the opening balance plus the increase. As your closing balance sheet is out by double your bad debt provision increase, your problem must be there. HAVE YOU CHARGED (DR) THE INCREASE IN PROVISION TO THE P&La/c? HAVE YOU ADDED THIS INCREASE TO THE BROUGHT FORWARD BALANCE AND SHOWN IT AS A LIABILITY IN THE BALANCE SHEET?

Q: What ideas do you have for someone in a bad debt situation?
Probably cant get a loan to pay them off because of my bad credit? My mom has good credit and might help me out though. Still wouldnt even know where to start. My cards are in horrible standing. At this point they are all closed accounts. They want their money in full (or a settled amount). I have a better job now and I can afford to pay 250 a month towards this. Any debt consolidation ideas; loan ideas; debt-relief programs??!?!?!

A: technical difficulties is jumping the gun way too much on filing bankruptcy. You don't give enough info about your situation to recommend it yet. It really will depend on how much debt you have. $5000? $10,000? So lacking this info, we need to work from the other direction. You can afford to pay $250 a month towards your debts. Over a period of 5 years that will amount to $15,000. Are you willing to be saddled with this sort of debt for that long? What are your alternatives? You can file for bankruptcy. They will look at your "disposable income" and force you to pay a certain amount each month toward your debts. It may be $250, it will most likely be more. You will be paying this over 3 to 5 years. Therefore, it would not make sense for you to file bankruptcy if with the situation I mentioned. But if you owe a whole lot more then $15,000, you need to consider bankruptcy as an option. Consolidation loans may be a solution for you. If you have gotten your "act" together and can show her you have learned your lesson, and can now manage your money, she may agree to co-sign a loan. But you MUST learn from your past mistakes. Get rid of your credit cards, do not get any more credit until this debt is paid off. If you follow this route, your next job is to determine which bill to pay. You mention that you have more then one card in collections? If they have been there for a while you may want to consider not paying them at all, and let the statute of limitations run out on them. But I'm going to guess these are only a few years into collections. Contact these people and offer to pay the debt in exchange for them removing the negative information from your credit history. If you pay in a lump sum, ask them to discount the balance by at least 25%. If you owe $2000, offer to pay $1500 all at once. Hope these suggestions help.

Q: How can I get a loan to pay off bad debt?
My credit score is 532 and I am about $6,000 in debt (maybe less). I want to start a business, but I know my bad credit is going to hinder me from doing that. It's not really possibly to save money because I am living paycheck to paycheck. How can I get a small loan to pay these debts off? Thanks Dave, but I can't get a second job...I already work full-time and I'm in school full-time all year around.

A: Unfortunately with those stats and no savings and no collateral the odds of you getting a loan are very low. And if you get a loan, the interest rate and terms (20% minimum ... payday loan places can nail you for 100s of percent interest) will be SO BAD that you would probably go in default and have an even lower score. I hate to discourage someone ... but ... if you can't save up money now ... and work full time and go to school full time ... how do you even hope to make the payments on a loan? Especially if the interest rate is incredibly high. Any new business usually loses money in the first year or two ... if you can't save up money .... this is a bad idea right now. My recommendation ... get out of school and get your credit straightened out, and save up at least 75% of the money you need to get started ... and then pursue your business opportunity. Good Luck!

Q: Buying up "bad paper"(debt) is being shoved down the taxpayers throat. What will/can you do?
President Bush and the Republican administration's Plan was to buy up bad debt from banks both foreign and domestic with $700 billion future tax dollars. Congress is putting lipstick on it, but it is still the same Plan. The Democrats claim it is different but it's not. What should we do? Thanks. I have already emailed and called my Senators and Congressman. But it looks like they are going to ignore the voters.

A: Simple, don't forget which way your senator and legislator voted next time they run for re-election. Start your campaign now and get it on your local news. ANyone who voted for it should get "FIRED" Next election day. We had a State senator who thought he knew better than his constituents....We "FIRED" him that very next election.

Q: Why do so many people on here with collections and bad debt want to know how to get another credit card?
I don't understand some people on here. People whine about bill collectors and about their bad credit and how it is everyone fault but their own. They complain about being turnd down for a loan because of their bad credit etc. Why not just make payments like you are supposed to so you do have problems. I don't understand why these people that are in so much debt want loans and credit cards to go deeper in to debt? Can anyone answer????? I think even Studly would agree with me here. To China Doll- When I was younger I was there. But I took care of my responsibilities before I tried to get more credit and loans. I paid my dues. All I am saying herer is that people should pay off ther existing bad debt before trying to get more. I am not judging anyone, just asking what is going through someone head when they say "I need another bill, another loan, another credit card and I can even pay the ones I have now"{ DUH!! To improve your credit you must first take care of delinquent accounts. If there are still unpaid collections on your file, getting a new loan or another credit card will not help.

A: I was wondering the same thing. But I guess some people have good reasons, other than just trying to see how much they can get for nothing

Q: How is Bad debt accounted in the Balance Sheet?
My understanding is that bad debt is charged as an expense in the income statement and also remove the amount of bad debt from the asset side of the balance sheet. if net assets = equity, then if asset is lower due to bad debt, then equity must reduce to balance the balance sheet. But, what is deducted in the equity side? Thanks

A: My understanding is that bad debt is charged as an expense in the income statement and also remove the amount of bad debt from the asset side of the balance sheet. - Your understanding is correct. what is deducted in the equity side? When bad debt is charged as an expense in the income statement, that will ultimately go to reduce equity via reduced profit which leads to reduced retained earnings.

Q: Can a credit card company sell my 'bad debt' to a collection agency after more than 15 years?
Does the collection agency have the legal right to pursue the 'bad debt'?

A: yes!This is huge money making business.In florida the bad year debt is suppose to be six years.A friend of ours was just taken to court by one for that he went ahead and paid it off before it arrived in court.But how do they take you to court when he hadnt done(i mean as in making any payments for it for yrs..not even one) anything ?i dont get it..

Q: How can I improve my credit after something is "charged off as bad debt"?
I had something "charged off as bad debt." I want to pay it off now that I can, but it's been sold to another company. The original company keeps marking credit every month, saying it was "charged off". If I pay the new company that is holding it, will the original company still mark my credit every month? How long will they do that?

A: Is the collection agency that bought this debt also posting to your credit report? If so, you can dispute the original creditor's report as a duplicate and get it removed. They will probably try to argue with you that they can legally do it, but I've witnessed enough court cases to know this is not the truth. If you push it, they will remove it. If the new company is not posting it, you are pretty much stuck. All you can do at this point is tell the new company to work with you to get it deleted, but you will have to pay this debt off first. DO NOT pay them a dime until you have a firm agreement they will delete this. Otherwise, you are paying a debt that will do absolutely nothing to fix your credit.

Q: I am starting my own business. What is an acceptable percentage to allow for bad debt?
I am starting my own business. What is an acceptable percentage to allow for uncollected customer accounts? In other words, bad debt expense?

A: It always depends of the market you`re in. Some fields of activity will allow 5% an others will allow 10%. You have to decide if you want to calculate your percentage on the total of your receivable or on the total of your sales, both are common practice. At first create an allowance for Doubtful Account in your balance sheet and make an estimate. The year after you will see if you`ve been too far off or if you`ve pretty much estimated it right. If you`ve over estimated it then make your new entry with a smaller amount for the following year.

Q: My fiance has bad credit and high debt. How does this affect me when we get married?
My credit is good and I try to always pay bills on time or early. I have some debt as well but so far its under control. So what should my concerns be regarding his bad debt and our marriage?

A: One of the fastest ways to get cash with bad credit, and little hassle, would be with a payday loan. Yes they have terrible interest rates but they are taking a risk. This site offers more details about the payday loans as well as various sites offering the loans, many without even a credit check. Do your homework. Best starting point is here: http://tinyurl.com/23zhb7 Good luck.