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Please explain me some terms used by collectors

Date: Fri, 06/10/2005 - 16:07

Submitted by anonymous
on Fri, 06/10/2005 - 16:07

Posts: 202330 Credits: [Donate]

Total Replies: 4


Can you please define the following terms “write off”. “termination of collection accounts”, “close out” relating to collection of debts? Thanx


Hi Guest

Welcome to the forums. I will define the mentioned terms sequentially.


  • Write off debts are those types of debts when it becomes uncollectible after the collection agencies have tried to collect it from the debtor in every possible way. In such cases, the written off debt is removed from the agency's financial record. The agency terminates all efforts for the collection of the mentioned debt.

  • Termination of collection account means that the collection agency should cease all sorts of collection methods of a particular debt.

  • Close out of a debt occurs when a collection agency decides to stop all sorts of collection activities after a certain period of time and in turn writes off that particular debt. When the debt is closed out by the collection agency, the amount of the debt is reported to the IRS as the income to the debtor.

Please let us know if there is anything further that needs clarification

We hope to see you actively participating in the forums for regular updates on debt consolidation and related issues.

Regards
Roxette


lrhall41

Submitted by roxette on Fri, 06/10/2005 - 16:29

( Posts: 4009 | Credits: )


Hello guest,
Welcome to the forums.
Quote:


Can you please define the following terms ???write off???. ???Termination of collection accounts???, ???close out??? relating to collection of debts? Thanx


Write-off: When a debt becomes delinquent and the debt collector realizes it is no more collectible, the debt collector may choose to charge the debt amount as an expense or a loss.

Termination of collection accounts: If a debt is very old and the Statute of Limitation has already crossed over, then a creditor or debt collector can no longer sue the debtor.

When the creditor or debt collector is unsuccessful in collecting the debt or the debtor shows no intention of repaying it within that period, then the collection agency will simply withdraw or write-off the account as uncollectible by the end of the fiscal year. This is called termination of the collection agency.

Close out: When a collection agency realizes that any future attempts to collect a debt would be futile, the agency reports the amount of the terminated debt to the IRS as a potential income to the debtor on Form 1099C, Cancellation of Debt.

Hope this information helps you.

Please feel free to return to the forum if you have further queries.

Regards,
Peter


lrhall41

Submitted by peter on Sat, 06/11/2005 - 03:42

( Posts: 285 | Credits: )