bad debt

Part of Speech

Noun

Pronunciation

/bæd dɛt/

Definitions

• A debt that is unlikely to be paid, often due to the borrower’s inability or unwillingness to repay.
• Debt that has been written off by a creditor as uncollectible after all efforts to recover the amount have failed.
• Financial losses arising from unpaid loans or credit that cannot be recovered.

Usage Examples

• The company had to write off a significant amount of bad debt due to defaults on loans.
• Bad debt can severely impact a business’s cash flow and overall financial health.
• The bank was forced to increase its provisions for bad debt after a wave of defaults from small businesses.

Etymology

The term "bad debt" emerged in the financial world to describe amounts owed by borrowers that were unlikely to be paid back. The word "bad" refers to the negative nature of the debt, and "debt" comes from the Latin word "debitum," meaning something owed. The phrase has been in use since at least the 19th century as part of accounting and business terminology.

Synonyms

• Uncollectible debt
• Bad loan
• Non-performing loan (NPL)
• Delinquent debt
• Defaulted debt

Antonyms

• Good debt
• Recoverable debt
• Performing loan
• Paid-in-full debt
• Repayable debt

Translations

Regional Pronunciation Variations

The pronunciation of "bad debt" is consistent across most English-speaking regions. However, in various non-English-speaking regions, the term may have localized variations depending on the language's phonetics and vocabulary.

Historical Usage

The term "bad debt" has been in use since at least the early 19th century, when it was first used in accounting and banking to describe loans or receivables that were unlikely to be collected. Over time, the phrase became more widely used in various financial contexts, particularly to describe non-performing loans in business and personal finance.

Cultural Nuances

In many cultures, bad debt is seen as a significant social stigma, especially in tightly-knit communities where financial obligations are taken very seriously. The concept of bad debt often extends beyond financial loss, symbolizing dishonesty, irresponsibility, or failure in one's financial dealings.

More Information

Bad debt is an important concept in both business and personal finance. For businesses, managing bad debt is crucial to maintaining cash flow and profitability. Creditors may attempt various means to recover bad debt, including lawsuits or selling the debt to collection agencies. In some cases, businesses will write off the debt as a loss for tax purposes. For individuals, bad debt can have serious consequences on credit scores and future borrowing capacity. In many countries, bad debt is considered a critical indicator of economic health and can reflect larger issues within the financial system.