Bad debt
A debt is a sum of money that is owed by or due from a debtor to a creditor.
A bad debt is a debt which a creditor realises will never be repaid, and which the creditor is not willing to embark on legal processes to retrieve. The loan is typically ‘written off’ ie, it is assumed lost forever, never to be received.
Such a state of affairs may occur, for example, when the debtor is a company that has gone, or is about to go, into liquidation, or a heavily-indebted individual passes away.
The term ‘insolvency' describes the inability of a debtor to pay its debts. In the United Kingdom, insolvent individuals are made 'bankrupt', while companies are put into 'liquidation' or 'administration'.
The precise definition of what constitutes a bad debt will depend on the country in which it exists.
[edit] Related articles on Designing Buildings Wiki
- Bridging loan.
- Insolvency.
- Buyer-funded development.
- Collateral.
- Construction loan.
- Construction project funding.
- Credit crunch.
- Equity and loan capital.
- Leaseback.
- Liquidation.
- Mezzanine finance.
- PF2.
- Private Finance Initiative.
- Project-based funding.
- Property development finance.
- Trade credit insurance.
Featured articles and news
Options for carbon neutral homes
Developments in the Future Homes Standard.
An American chimney feature with a colourful past.
Homes based on need, not ability to pay.
Historic England adds 216 entries to the 'at risk' register.
Post-pandemic transport predictions
Will cycling and walking provisions be preserved?
Assembly point levels range from relative to ultimate.
Anticipating a brighter outlook
Signs are pointing to a recovery for the construction industry.
Campaigning to change perceptions about American Brutalism.
Sprinkler head configurations can prioritise people or property.
Report from The Carbon Project reveals shortcomings and recommendations.
Advice on how to join the electrotechnical profession.
The social impact of the built environment
BREEAM Building Back Better briefing paper provides initial guidance.
Art of Building photo contest announced
CIOB conducts global search for best built environment picture.