In the financial terms, a bad debt or non-collectible funds are the loans and debts that are not recoverable from the debtors and loaners. In simple words, when you give loan or credit to someone and later you discover that the debtor is bankrupt or can’t return the loan due to financial problems, you need to mark this amount of debt as bad debt which will never be collected from the debtor. It’s not very common that a debtor can be declared as bad debt because most of the time, creditors take great precautions before granting a loan or debt to anyone and they also require some kind of guaranty from the debtor for the safe return of the loan.
Introduction to the Return of Claim as Non-Collectible:
When a person, a company or a mortgage loan or credit firm gives credit or loan to an individual or another company, there is always chance that even if the debtor agreed to return the credit or debt, somehow he won’t be able to return it and the company will have only one thing to do; mark the funds as bad debts or non-collectibles. This is why most of the time, credit companies and mortgage loan firms take great care of evaluating the applicants for credit cards and loan plans just to make sure this never happens but with all the precautions, this does happen.
It’s not only for the credit companies or mortgage loan firms but when a supplier delivers an order to a customer on credit, he also knows that there are some chances the customer will not pay the invoices and he has to mark the order as bad debt. In this sense, when a creditor approaches a debtor with the collection letter or hires a collection agency that contacts and meets with the debtor and finds out that the debtor can’t make the payment for his debt or the credit that he took. In this situation, the official status of the funds is converted to non-collectibles and this claim is returned to the original creditor with the report about why the debtor won’t be able to pay back the debt.
Key elements to include in the Return of Claim as Non-Collectible:
- Name of the debtor who is under discussion with complete address
- Name of the person who is returning the claim as non-collectible
- Name of the collection agency with complete address (if any agency is involved for collection purposes)
- Date when the claim is returned to the creditor
- Details of the credit or loan that the debtor has refused to pay back
- Details of the items purchased by the debtor from the creditor or the amount he borrowed as loan or credit that he can’t return now
- Date when the debtor was approached by the creditor or collection agency
- Reasons why it’s crucial to declare the mentioned debtor as bad debtor or non-collectible
- Options for the creditor to consider for further process of the non-collectible (if applicable)
- Signature of the person who approached the debtor and found out about the non-collectible
Here is preview of a Free Sample PDF Form for Return of Claim as Non-Collectible created as Fillable PDF Form,
Here is download link for this PDF Form for Return of Claim as Non-Collectible,