A bad debt is a loan which has little if any chance of being repaid. For example, a loan to a company who have gone into bankruptcy.
Bad debt provision occurs when firms note in their accounts that former assets (loans which should be paid) have no chance of coming into the company. If the firm has numerous different types of bad debts, they may not list them individually but post a generic ‘bad debt provision’
Sub Prime Bad Debt Write off
Bad debt write off is essentially the decision to assume the debts will not be repaid. In the subprime crisis of 2008, many financial institutions had to write off bad debts from the US subprime crisis. These bad debts amounted to billions of dollars and are a reflection of