When is a debt uncollectible?

Written by russell huebsch
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When is a debt uncollectible?
Companies write off debt they feel is uncollectible. (debt defined image by Christopher Walker from Fotolia.com)

If given enough time, almost all debts are uncollectible. When a company believes it has no reasonable chance of collecting debt, it becomes uncollectible, but this does not go without consequence for the customer.

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Time Frame

Each state has its own laws on when a lender can no longer go after a debt. The time span ranges from two to 15 years, according to the BCSAlliance.com. After the statute of limitations passes, the lender cannot go after the borrower in court.


A company must write off a debt for it to become uncollectible, according to CardReport.com. Usually, companies write off debt after six continuous months of nonpayment. As soon as a debt is written off, the time limit on the statute of limitations begins.


A written-off debt remains on a credit report for seven years and is one of the worst red flags you can have. Also, debt collectors and the lender can still sue you until the statute of limitations passes.

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