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Loan Glossary - Define: Bad Debt Q. What is Bad Debt? Answer: A debt that the lender cannot collect on. This is money with which the borrower has defaulted on payments and has not repaid. In some cases, the lender may look at the amount owed and deem that it is not worth the extra expense of using other methods to collect the debt. However, it does go on the borrower's credit record as a negative item.
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