Legal Question in Credit and Debt Law in Maryland

Re: Judgment Laws

When a company "writes-off" a debt, that just means that from an accounting perspective the debt is deemed uncollectable and can no longer be counted as a receivable asset on the company's financial records. It does not affect the debtor's contractual obligation to pay. Frequently, these accounts are sold to other companies that do try to collect them. However, there may be statute of limitations bars to collecting old debts -- that would depend on the facts of your circumstances.

Lawrence R. Holzman, Esquire

Joseph, Greenwald & Laake, P.A.

6404 Ivy Lane, Suite 400

Greenbelt, MD 20770

(301) 220-2200

fax (301) 220-1214

Disclaimer: Please note that the posting of this response is not intended to constitute legal advice. You should contact an attorney to obtain information applicable to your situation. This posting is not confidential or privileged and does not create an attorney/client relationship.

Re: Judgment Laws

A financial, and often tax, accounting event occurs when an account is written off. In most cases this has little to do with whether the

debt can still be collected. However, where there was an accord and satisfaction (i.e., an agreement between the debtor and creditor whereby the

creditor agrees to accept less and the debtor pays in "full" satisfaction of the "accordance" agreement) and the remainder of the debt is written off, then this "type" of

write off is generally not collectible. Another case is where a debt was unliquidated (i.e., not agreed or set in amount by court process) and the debtor/creditor do come to agree and debtor does pay

the agreed amount on the account then there is also a discharge of amounts the creditor comes to believe are due from the transaction.

Additionally, accounts receivable are sold regularly (often at a discount). There are many factors involved in such a sale, such as with or without recourse, etc. In some instances, a debt may have been incurred that cannot be sold

to another, or the contractual relations between the original parties otherwise limits the sale. Moreover, statute of limitations issues may preclude collectibility.

In summary, a mere write off, without more, is almost always not a preclusion to subsequent activity to collect.