In cases where the client is no longer in business or they simply disappeared or you know you will never get payment from them at any time; writing off the debt may be your best option. You simply can’t get blood from a turnip according to the old saying and throwing good money after bad isn’t advisable.
Did you get a Judgment?
If, however, you have a judgment from court, instead of simply writing it off, it might pay to hold on to it.. just in case. You have up to 10 years to collect a judgment, and the client just might come back into business.
However, if your business just provides services, the bad debt cannot simply be written off. The idea here is that it would be that independent contractors can easily inflate bills and then claim huge deductions for bad debts that were never actually incurred. (If goods are a portion of the bad debt, you will be able to deduct the price of the good received by the client that they didn’t pay for.)
Marcadis Singer, PA, is a Florida based law firm dedicated to debt collection. We work with attorneys that are owed money, as well as entrepreneurs, small businesses, and large financial institutions. The entire focus of our practice, is recovering debt for our clients. Call today for a consultation.