Both naughty… not nice
It’s the language of the law that trips us up so often when we’re trying to make heads or tails out of the records our ancestors left behind.
.And reader Robin Hurwitz came up with a doozy in a Tennessee probate document. She was “pretty sure” her Tennessee ancestors were “just plain dirt poor and won’t have anything to sell off upon death,” but then she came across a supplemental inventory of the estate that listed a series of notes:
• Six of them — ranging in amount from $13.96 to a high of $400 — were under the heading “Notes Good.”1
• Five of them — ranging in amount from $19.00 to $106.20 — were under the heading “Doubtful Notes.”2
• And 14 of them — ranging in amount from $2.50 to $293.45 — were under the heading “Desperate Notes.”3
So, she wondered, and asks The Legal Genealogist, “what’s the difference is between a doubtful note and a desperate note. Doubtful it will be paid? Doubtful it’s a real note? Desperate to get paid?”
And not the easiest one to find an answer for.
Because the answer isn’t just a matter of opening up the law dictionaries.
Oh, there is a good definition of desperate debt: “A hopeless debt; an irrecoverable obligation.”4 “This term is used in inventories and schedules of assets, particularly by executors, etc., to describe debts or claims which are considered impossible or hopeless of collection.”5
This is, by the way, the opposite of “sperate” — a term you’ll also see in some of those estate documents: “That of which there is hope. Thus a debt which one may hope to recover may be called ‘sperate,’ in opposition to ‘desperate.’”6
But there isn’t any law dictionary definition for doubtful debt.
Fortunately, there is an accounting dictionary definition.
Let’s start with the notion that what we’re dealing with here, generally speaking, is a category called bad debts: “If someone owes you money that you cannot collect, you have a bad debt.”7
Sometimes, it’s crystal clear, at the point where a debt needs to be categorized, that you’re never going to be able to collect on it. The debtor has gone bankrupt or died, for example. Or he was one of your Smith County neighbors when he borrowed the $25 in 1845, and then he went off to Texas in 1846 — and hasn’t been heard from since.
Those debts — the ones you know won’t ever be paid — are the desperate debts.
But sometimes you’re not sure whether the debt’s going to be paid. It’s “an amount owed to an organization by a debtor that it might well not receive.”8 Or a debt “where circumstances have rendered its ultimate recovery uncertain.”9
In the final analysis, “a doubtful debt is one that may become a bad debt in the future.”10
So both doubtful and desperate debts are ones that the estate administrator or executor would be putting on his naughty list… but he’d have to check it twice.
- Smith County, Tennessee, County Court, Supplemental Inventory, Estate of William Denney, 4 April 1853; digital images, “Tennessee Probate Court Files, 1795-1955: County Court, Miscellaneous inventories and estate records,” FamilySearch (https://familysearch.org : accessed 11 Dec 2016). ↩
- Ibid. ↩
- Ibid. ↩
- Henry Campbell Black, A Dictionary of Law (St. Paul, Minn. : West, 1891), 360, “desperate debt.” ↩
- Ibid., “desperate.” ↩
- Ibid., 1115, “sperate.” ↩
- U.S. Internal Revenue Service, “Sales and Trades of Investment Property,” Investment Income and Expenses, IRS Publication 550, online version (https://www.irs.gov/publications/p550/ : accessed 11 Dec 2016). ↩
- Jonathan Law, A Dictionary of Accounting, 4th ed. (Oxford: Oxford Univ. Press, 2010), 158, doubtful debt. ↩
- “Accounting Glossary: Doubtful debt definition,” VentureLine (https://www.ventureline.com/ : accessed 11 Dec 2016). ↩
- Steven Bragg, “What is the difference between bad debt and doubtful debt?,” Accounting Tools, posted 19 Feb 2011 (http://www.accountingtools.com/ : accessed 11 Dec 2016). ↩