A bad debt is an account receivable or amount owed that has not been paid and unless the steps taken to recover it are successful, it will likely be written off as an expense on your income statement. A business will generally factor in a certain percentage of bad debts when estimating earnings.
According to the Federal Trade Commission and the Consumer Financial Protection Bureau, debt collectors are one of the most complained about businesses and with good reason. Few people have positive experiences dealing with debt collectors. Even the rare nice ones can be a nuisance. But it's typically cheaper for businesses to use collectors, so it's not likely that these types of accounts are going anywhere soon.
Everyone makes mistakes, and credit bureaus are no exception. In fact, a Federal Trade Commission study last year found that one in four consumer credit reports contain errors – these include everything from minor mistakes to outrageous oversights.
Any time you have to borrow money especially for student loans you want to choose a loan that has a low interest rate. Student loans can total up into the thousands and thousands of dollars. The interest on most loans starts to accumulate as soon as the loan is paid out. Student loans often have a deferment payment until after you graduate. Can you imagine how much interest that would be? It would be a lot of extra money you have to pay back.
Reminder to creditors – make sure you don’t have to pay back repayments from your debtors!
Jim owned a company which supplied commercial machinery parts to a number of manufacturers. He noticed that one of his customers, who manufactured metalwork machinery, was sometimes a bit ‘slow’ to pay for the parts after they had been supplied, but they were a long-standing customer so he didn’t want to make a big deal about it.
Congress may be unfathomable on a good day. But, financial silliness isn't limited to them. We who elect and re-elect the best and brightest from our states are not without our own financial follies. Forget the 2013 Financial Cliff! Here is my take on the 2014 Abyss for dumb debt moves.