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      How to handle unpayable debts

How to handle unpayable debts If a debt cannot be paid because the creditor has gone out of business or cannot be located, the committee may write to the FEC to request permission to discontinue reporting the debt. The letter must demonstrate that the debt is at least two years old and that the committee has exercised reasonable diligence to reach the creditor. The committee must continue to report the debt until the Commission determines that the debt is unpayable. Both terminating and ongoing committees may obtain a determination from the Commission that a debt is unpayable for purposes of the Federal Election Campaign Act because the creditor has gone out of business and no other entity has the right to be paid or because the committee, despite exercising reasonable diligence, could not locate the creditor. A debt must be outstanding for at least 24 months for the Commission to consider whether a debt is unpayable. The committee must continue to report the debt until the Commission determines that the debt is unpayable. An inactive committee that wants to terminate but still has outstanding debts must make efforts to settle the debts. If debt settlement efforts fail, however, such a committee may seek administrative termination by the FEC. (The Commission may also, at its own initiative, administratively terminate a committee’s reporting status.)
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          Debts owed by party committeesEstimating debtsHow to handle disputed debtsSettling debts for less than the amount owed Need help? Get help from the FEC by phone or email
 Legal citations Regulations 11 CFR 116.9Creditors that cannot be found or that are out of business


This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


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