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If, for example, you expected to receive $1000 against the outstanding debt, you would not be able to write off the bad debt until after you recevied the $1000. At that point, the remaining balance would be totally worthless.

Thank you. This is perfect, and I understand it now. We are in the process of closing out the entire estate, and so once all the checks are distributed, which will happen this week, the remaining balance will be outstanding, and so that is the number that will be our bad debt.

We weren't sure if anything would be able to be paid on the note given the Medicaid lien, and so we did wait until the very end of the process to see how it would turn out, though we knew the estate was bankrupt. We still had a chance to work with Medicaid to actually allow some of the note to be paid back, and so we have worked through that process at this point, and just received the official letter from Medicaid saying that the estate assets could be distributed, and how much goes to them.

There's an order to how things are paid, and the promissory note was in a bit of a gray area. Now, we do have the final numbers and so I can get all my paperwork in order.

Thanks so much for the quick clarification.
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