What are 'Accounts Uncollectible'
Accounts uncollectible are loans, receivables or other debts that have virtually no chance of being paid. An account may become uncollectible for many reasons, including the debtor's bankruptcy, an inability to find the debtor, lack of proper documentation, etc.
BREAKING DOWN 'Accounts Uncollectible'
Before an account is classified as uncollectible, it usually becomes a "doubtful" account. Companies and banks keep a cash reserve for these accounts, which is a contra account to the loan or receivable account. Once an account is deemed uncollectible, it must be written off.