307 Bad Debt / Write Off Policy
Fiscal Operations Manual
Section 300: Accounts Receivable
ORS 293.240 provides a procedure by which a state agency may obtain approval from the Secretary of State to write off, from the agency’s accounts, uncollectible debts that are due the agency.
A bad debt expense is charged to all departments submitting charges to be billed through accounts receivable. The amount is a percentage of the accounts receivable balance at year-end. The percentage is based on the bad debt experience of the individual fund submitting charges. The calculation is done by the Office of Business Affairs, and is adjusted annually.
The following criteria for uncollectible debts are approved for adoption and use by all state agencies.
- The debtor does not and will not for the foreseeable future own or have the right to own assets from which the state agency could collect the debt.
- It is reasonably estimated that the cost of collecting the debt would be equal to or exceed the amount of the debt.
- The debtor is deceased and there are no assets in the debtor’s estate from which the state agency could collect the debt.
- The debtor’s estate is subject to a pending bankruptcy proceeding in which it is reasonable to conclude that the debt will be discharged and that the state agency will receive none or an insubstantial share of the assets of the bankruptcy estate.
- The agency is and will be for the foreseeable future unable to collect the debt from the debtor or from anyone owing the debtor money or holding assets of or from the debtor.