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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.)