A bad debt occurs when someone owes you money and your efforts to get paid have failed. This is a term used a lot in business, but you can recoup some of a personal (nonbusiness) loss by claiming the bad debt on your tax return. For tax purposes, this is treated as a short-term capital loss.
In Tax Topic 453 - Bad Debt Deduction, the IRS offers a few considerations:
To claim a nonbusiness bad debt in TaxAct: