The concept is simple and straightforward. Debt collection agencies collect debts on behalf of creditors and debt buyers and law firms. However, not every debt is tangible enough to be collectible and this kind of debt is termed as ‘accounts uncollectible'.
A Bit Deeper Into The Concept
Accounts uncollectible, also called as uncollectible debts are those accounts that do not stand a chance to be paid off. These are the debts that will most likely never be paid. And there are various reasons for this to happen.
- The customer is unreachable
- The customer declares himself to be bankrupt
- The customer is unable to make the payment
- The customer challenges the debt.
There are a good number of chances that any given debt can reach the extent where it becomes uncollectible, debt collection agencies can do a lot before these accounts reach a point of no return. The job of debt collection agencies is to lessen the overall effect of these accounts that will eventually turn uncollectible and try out methods that will prevent them from turning into bad debts.
The longer a company will wait to collect their debts, the more account stands to become uncollectible. We have taken a good look at some reasons why does this happen. So if a person owes you a debt, they are supposed to repay it, aren't they? And this is where most of the creditors go wrong.
A Debt Can Reach The Pinnacle Of Uncollectible
Every state has separate laws that will affect how long the creditors and collections agencies can legally continue to collect a debt from a certain person. While some states have got statutes that can set the debt collection window up to 15 years, most of them limit this somewhere around 3 to 6 years.
Once a debt becomes older than these years, it is considered to become "time-barred debt". Collecting a time-barred debt is possible, but the methods to collect that are limited and legal firms, debt buyers, debt collectors cannot sue or credit report on.