In its simplest form, debt is an obligation for you to pay another person at some time in the future. The agreement to pay can be oral or written.
An oral agreement is a spoken agreement between two or more people. Other times the agreement will be in writing. A written agreement usually states the amount owed, the interest rate and when payments are due. The person who owes money is called the debtor.
Many transactions and situations can give rise to debt obligations.
From everyday bills to bank loans and credit cards, most of us have debts of one kind or another.
If you are in a situation where you are unable to meet your debt obligations it is important to understand your options and to try to resolve the matter as quickly as possible.
Under credit agreements creditors have options to protect their interests when a debtor fails to meet their obligations.
When a debt goes unpaid, creditors may choose to seek a court judgment against the debtor in an effort to get their money back.
When a mortgage is in arrears the lending institution can take steps to foreclose on the mortgage and take over ownership of the property.
When a debtor is simply unable to manage their debt and has no likely prospect of doing so in the future they may consider filing for bankruptcy.