What is bad debt?

What is bad debt? Bad debt to a company that is lending money, is money that is owed and not being collected. People who borrow money for various reason just stop paying. They may have lost a job, divorce or even a death in the family will halt a persons ability to repay a debt. A company when declaring it a bad debt, no longer has to count it as a receivable and they are able to write off the loss on their taxes.

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