Bad debts refer to receivables that have passed the payment deadline, cannot be recovered after collection, are in a sluggish state for a long time, and may become bad debts.

The following situations can be recognized as bad debts:

1. The borrower and the guarantor declare bankruptcy, closure, dissolution or revocation in accordance with the law, and terminate their legal person qualifications. The financial enterprise shall have no liability to the borrower and the guarantor. The creditor's rights that cannot be recovered after a person recovers bad debts.

2. If the borrower dies, or is declared missing or dead in accordance with the provisions of the "General Principles of the People's Republic of China and the Civil Law of the People's Republic of China", the financial enterprise shall pay off its property or inheritance in accordance with the law and pursue compensation from the guarantor. Later, the debt could not be recovered.

3. The borrower suffers a major natural disaster or accident, suffers huge losses and cannot obtain insurance compensation, or is truly unable to repay part or all of the debt after insurance compensation, and the financial enterprise shall repay and repay the borrower's property. A creditor's right that cannot be recovered after the guarantor pursues repayment.

4. Although the borrower and the guarantor have not declared bankruptcy, closure, dissolution, or revocation in accordance with the law, they have completely ceased business activities, and their business licenses have been canceled or revoked by the industrial and commercial administration departments at or above the county level in accordance with the law. , the creditor's rights that the financial enterprise failed to recover after pursuing repayment from the borrower and guarantor.

5. Although the borrower and the guarantor have not declared bankruptcy, closure, dissolution, or cancellation in accordance with the law, they have completely stopped business activities or their whereabouts are unknown, have not registered with the industry and commerce, or have not participated in the annual industrial and commercial inspection for more than two consecutive years. Creditor's rights that financial companies have failed to collect after pursuing repayment from borrowers and guarantors.

6. The borrower has violated criminal laws and been sanctioned in accordance with the law, and his property is insufficient to repay the debt, and there are no other debt-bearers. The financial enterprise is indeed unable to recover the creditor's rights after recovery.

7. Since the borrower and the guarantor were unable to repay their due debts, the financial enterprise resorted to legal action. The court enforced the debt against the borrower and the guarantor. Neither the borrower nor the guarantor had any property to enforce the debt. The court ruled that Creditor's rights that a financial enterprise cannot recover after termination, termination or suspension of execution. or Due to the loss of loan contracts, guarantee contracts and other rights documents or the expiration of the statute of limitations, the court will not accept or support the claims, and the financial enterprise cannot recover the claims after recovery.

9. Due to the above reasons 1 to 8, the borrower is unable to repay the due debt, and the financial enterprise obtains debt-repaired assets in accordance with the law. The debt-repaired amount is less than the difference between the principal and interest of the loan, and the debt cannot be recovered after recovery.

10. When an advance is made when issuing a letter of credit, handling an acceptance bill, or issuing a letter of guarantee, if the applicant and the guarantor are unable to repay the advance due to reasons 1 to 9 above, the financial enterprise shall recover the repayment. Advances that cannot be recovered later.

11. For external investments by financial enterprises with investment rights in accordance with national laws and regulations, if the invested enterprise declares bankruptcy, closure, dissolution or cancellation in accordance with the law, and terminates its legal person status, the financial enterprise shall undergo liquidation and recovery. equity that cannot be recovered later.

12. After a financial enterprise is approved to use market means such as package sales, public auctions, and transfers to dispose of claims or equity, the difference between the sale transfer price and the book value can be determined as bad debts.