Description: If you slip up, you could become a victim of zombie debt. What? Some debt is subject to a statute of limitations, meaning you can’t be taken to court to force payment after a certain period of time has passed. But if you acknowledge this debt after this period has passed, perhaps by responding to an inquiry by a collection agency, then the clock starts all over again. With Canadians carrying considerable levels of credit card and other consumer debt, this can be a significant issue for citizens who thought they may have escaped a past claim.
Date: November 11, 2019
1) Have you ever heard of this statute of limitations on debt?
2) Do you know anyone who has avoided payment by taking advantage of the statute of limitations? What is your opinion of this as a strategy/
3) On page 423 of Wiley’s Financial Accounting: Tools for Business Decision-Making, is a section on collecting uncollectible accounts. What journal entries does a company make to record collection on an account previously written off?