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Most of the creditors will obtain their losses at the time of the bankruptcy filing. Business bad debts can be written down to expected net realizable value. They do not have to wait until the debt is totally worthless which is required for nonbusiness bad debts.
Thanks for the answer back. Just one more question.
(A repeat from comments)
If someone buys a bankruptcy claim (at a discount) and ultimately realizes less than its face value, can they too claim a loss?
The purchaser may be entitled to a loss if they receive less than they paid for the note. If they purchase a $1,000 note for $200 and receive only $75 they will have a $125 loss. If they receive more than $200 they will have a gain.