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The charging or writing off of a debt is only a required accounting entry by the creditor. It does not effect you, or change the amount you owe, or that you owe it.
It does not change any of the legal methods to force collection that were available before making the entry.
All it does is make the creditors accounting statement recognize that an asset (your receivable) that it expected to realize, and already recorded as income, is not going to happen. they are taking the charge to their books for the expense of your not paying, or that it is now considered unlikely you will pay, and the asset does not exist (or in bank terms, is no longer productive).
It does not mean they won't pursue it...in most cases they must. If they get paid (anything or all on it), that amount is considered income and booked as a recovery to replace what they took as a a charge.
A bank, based on experience, will estimate what portion of its asserts (that are loans it has made), will not be paid. So, now in 2008, when more people are defaulting, most are saying they expect to receive less, and increase a "reserve" or "accrual" account they made for it. So for example, they may say they have $100 of loans outstanding...and they expect X income from it...but based on experience they say they anticpate 10% won't pay so the establish a reserve (a charge against that expected income) of 10% and show only $90 of a net asset. As you may expect, they do this very analytically, with diffwerent ratios for different types of laons....credit cards compared to car loans compared to home loans (and then different loans based on age or interest rates, or type of property, etc).
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What happens when a bank writes off a debt?
The debt is simply deducted from the bank's assets. The bank sets its own interest rates for lenders, and any debts they write off is balanced by an increase in the interest rate.
Seize bank account for credit card debt?
If your bank account has been seized because of a debt you owe, you should call and work out a payment arrangement with the creditor. You should also start a new bank account.
What is the statutory limit before a debt becomes a 'bad debt write off'?
180 days
What is the Procedure for preparing a bank reconciliation?
If using an official form, first write the date the document was prepared.Next, write down the balance of the next unused check stub, recording its number as well.From that number, deduct any charges from the bank (i.e. service charges). This will indicate your 'adjusted check stub balance'.Then, write down the balance from your bank statement. Add to this number any deposits which have occured but are not included in your bank statement. Total the amount.After this, subtract the total amount of checks written that are not on your bank statement from the previous total.This number is called your 'adjusted bank balance' and should equal your adjusted check stub balance.
What is a bank reconciliation for prepared for?
If using an official form, first write the date the document was prepared.Next, write down the balance of the next unused check stub, recording its number as well.From that number, deduct any charges from the bank (i.e. service charges). This will indicate your 'adjusted check stub balance'.Then, write down the balance from your bank statement. Add to this number any deposits which have occured but are not included in your bank statement. Total the amount.After this, subtract the total amount of checks written that are not on your bank statement from the previous total.This number is called your 'adjusted bank balance' and should equal your adjusted check stub balance.
