Bad debts in business

[Sotherefore]

Bad debts as I understand is a situation in which a loan collector cannot pay back The loan he or she has collected and one of the most popular reason is because they are not able to generate the required profit they expected..

As a debtor it is always necessary to make all adequate arrangement to pay back all the money you have collected for any reason , not minding whatever you used the money to do . if a debtor is being taken to the court , the law will hold the debtor responsible because no matter what may be the reason it is expected that you pay back the money you have collected.

Because of this a lot of people are always afraid of giving out loans and credit to people because they believe these people may not be able to pay back the money they have collected .

For a loan owner I believe the best way you can be able to get back financial assets when a debtor has purposely refused to pay is the use of government and security agencies.. sometimes fighting on your own may not helped this problem to be solved anytime quicker..

what other ways do you think we can get back our money from debtors..? Comments below.

 

[Jasz]

A bad debt is a type of business debt that the borrower has no intention of paying back. Bad debts can occur in many industries, but most common in business-to-business transactions. Businesses may have trouble receiving payment for products and services delivered when the client does not have adequate funds to pay for them.

In this way, bad debts are similar to accounts receivable and trade credit. All three types of debt are unsecured, meaning that businesses cannot take legal action against clients to force payment if they do not want to pay their bills.

Businesses have to pay for their debts.

If the revenues coming in from a business aren't enough to pay for all of its expenses, the business has bad debts. Any debt that is past due or close to becoming past due is also considered a bad debt. Badger debts are problems for businesses because they can't bring in money and using them may affect a company's credit rating.

A lot of people assume that bad debts only come from customers who don't pay, but businesses can also have bad debts if they loan money to people or organizations that can't pay it back.

 

[Abigael]

Bad debt is truly not good a business or individual at all. It shows that you took a loan without a proper plan to pay it back. This can put in a bad situation as it gives you a negative credit history. Which will hinder your future advances of applying for loans.

It can also put you in trouble with the law. Especially if you signed a contract with the loan lender. They will take you to court and you may suffer serious consequences of not paying back what you owe them. It can also hinder you from getting government opportunities like jobs and grants. This is because they mostly look at your credit history these days before you qualify for those opportunities.

Being in bad debt may even cause you to loose your trusted customers. This is because they don't trust your business anymore and don't see a future in it. Moreover, being in bad debt can make you loose friends and cause problems with family.

 

[Rachael]

Bad debts in business usually emanates when a loan collector is unable to repay the loan he collected. Bad debts in business is one of the fastest way of crippling the growth of a business. This is the more reason whereby people who are experienced do not advise or recommend taking of loans most especially in startups businesses. It is unfortunate that at times, an individual would have the business idea but the barrier comes from lack of startup funds or capital and this leads to no other alternative available than to collect loans. There are other forms where capital can be raised both for new and existing businesses but people seem to choose taking loans to other alternatives due to the ease which is involved. Crowdfunding, where you pitch your business idea to the public and call for support and donations is a way out, empowerments which could come either from the governments or philanthropist, where a platform for entrepreneurs is being setup to pitch their ideas and the winner is being empowered with startup funds. Government empowerments could come in the form of grants especially for low income earner and agriculturalists. Again, we should be creative in always balancing both earning profits and repaying the loan so it does not get too choked up or pressurizing.

 

[Caramelle]

People who plan to make money by giving out loans should be equipped with knowledge of applicable laws as well as appropriate documentation. Bad debts have become increasingly common these days due to economic reverses and the lender needs the law's protection in cases of default or the debtor's refusal to pay. After the grace period and after exerting reasonable efforts and time to collect, the creditor should seek a court's intervention to recover his money as well as the interest for its use. Depending on the amount of loan, the creditor may file a collection case through a small claims court or a civil court. Both courts will need proper documentation to proceed. The creditor needs to prove that the debtor owed him/her money and that the transaction was legal. Even then, the debtor may claim bankruptcy or the lack of feasible means to pay the debt at present. Thus, lending is a risky business.​