Creditor Advantages

[howie789]

Just wondering what advantage it would be for a creditor to "let a debt go" as opposed to fighting it (like in an adversary proceeding)...do they get to write the whole debt off on their taxes, or do they get to write off maybe 75-80%??

[lrprn]

Creditors get to write off their losses on their taxes, plus they can sell your debt to a collection agency and get back some of what you owe as well. If writing off your debt didn't allow lenders to essentially break even in the long run, they sure wouldn't be doing it!

[CATCHMEIFYOUCAN]

And they continue to make BILLIONS of PROFIT every year !

[howie789]

is it 100% debt write off? if I owe $5000, can they write off the full $5000, or a %?

[CATCHMEIFYOUCAN]

I'm pretty sure they can write off the whole amount and still make out in the end ! It's pennies on the dollar to them !

[HHM]

Just wondering what advantage it would be for a creditor to "let a debt go" as opposed to fighting it (like in an adversary proceeding)...do they get to write the whole debt off on their taxes, or do they get to write off maybe 75-80%??

In BK, there are only a limited number of reasons a creditor can argue to fight the discharge, the creditors don't get to fight the discharge on a whim. The majority of the time, they have no choice but to "let the debt go", or the amount is low enough that the costs and risks of the litigation outweigh any potential return.

[demismom]

I own a business and last year had to write off bad debt not collected. It just lowered my net income on my Schedule C, so technically I didn't get it back dollar for dollar, if that's what you're asking. Not sure if it works the same way for a corporation, but that's how it works for a small business.