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Allowance for Bad Debts vs bad debt expense?
An allowance for bad debt is essentially a reduction in a bank's accounts receivable. The allowance for bad debt equals the amount of the banks loans that it does not expect to collect.
If banks writes off loan can they collect in Maryland?
Charged off accounts can still be sold to third-party debt collectors for collection. Nothing precludes them from attempting to collect on a charged off account. The collection agency that is contacting you would have to be licensed in the State of Maryland to conduct business. You can obtain licensing information on the Maryland Commissioner of Financial Regulation website.
Under the allowance method Bad Debt Expense is recorded?
Under the allowance method bad debt expenses are charged to allowance for bad debts accounts instead of profit and loss account because profit and loss account is already charged with the allowance amount created.
Is it illegal to start collections on charged off accounts?
is it against the law to start collections on charged off accounts.I beg to differ but you can also look this up. It is not illegal to start collection proceedings on charged off accounts, most businesses will write debts off to bad debt BEFORE placing them with a 3rd party collector such as an attorney or collection agency.Once payment is made the money is posted to bad debt recovered to offset the write off. This is done to remove the bad debt from their books and also for tax purposes.
How do you know if your debt was charged off and if so does that mean you don't owe anything and then your credit can begin to improve again?
A charge off does not relieve you of the debt. It is a term that banks use to clear defaulted accounts off of the books. As a general rule, the account is sold to a third party. That agency will continue efforts to collect the debt. The charge off/debt will stay on your credit report for seven years. The state you live in is only relevant if any legal action such as a lawsuit is taken.
Is it true when using the allowance method of accounting for uncollectible accounts the entry to record the bad debt's expense's is a debit to Bad Debts Expense and a credit to Account's Receivable.?
No while using allowance method, bad debts are charged to allowance for bad debts account rather charging the accounts receivable because accounts receivable was already charged with allowance when it was created.
If you pay on charged off accounts are you throwing money away since no one is trying to collect on them?
Just because an account is charge-off does NOT mean the debt is not being collected upon or that the debt is expunged. Charge-off accounts are often sold to collectin agencies or junk debt buyers who will subsequently try to collect on it. Paying a charged-off debt will not help your credit scores. A status of 'paid charge-off' or 'paid collection' is still a negative. A mortgage lender may look more favorably upon accounts like these, but paying won't remove the tradelines or increase your scores.
Where do banks get the money to lend?
Banks primarily get the money to lend from customer deposits, which include savings accounts, checking accounts, and other deposit products. They also obtain funds through borrowing from other banks or financial institutions and by issuing debt securities. Additionally, banks can access capital markets to raise funds. This pooled money is then used to provide loans to individuals and businesses, earning interest in the process.
When is bad debt removed from accounts receviable?
When bad debt amount is recovered then it can be removed from accounts receivable as receivables.
Which bank has the best plan for debt reduction?
Most banks offer debt reduction options. Whether it is counseling or consolidation loans. Bank of America has a good plan. Credit Unions also offer great plans and usually have no fee accounts.
During a foreclosure can the mortgage company go into your bank account or asssets?
AnswerChange banks if the lending institution and bank are the same place. By federal law, banks can seize assets from accounts held at their own institution to pay a debt owed to them without notice.
What are the consequences of leaving the US to get away with credit card debt but keeping other assets in US banks?
Once they find the accounts if under your name they will take out money with the support of the federal government.
