Archives: Terms

Introduction to Debt Collection Agencies A debt collection agency is a business that specializes in recovering unpaid debts. When individuals or businesses owe money and have fallen behind on payments, creditors often turn to debt collection agencies to handle the task of retrieving the owed amount. These agencies employ various […]

Definition of Debt Service Ratio The Debt Service Ratio (DSR) is a financial metric used to measure an individual’s, company’s, or country’s ability to handle their debt obligations. Specifically, it compares the total annual net income to the total annual debt service payments, including both principal and interest. A lower […]

Definition of Debt Service Debt service refers to the total amount of money required to cover the repayment of interest and principal on a debt for a specified period. It is a critical indicator of the financial health of a borrower, being relevant to both individuals and organizations, including governments. […]

Definition of Debt Rescheduling Debt rescheduling refers to the financial process in which the terms of an existing debt are modified, typically due to the difficulty of the borrower in meeting the original terms of the debt. This renegotiation can include extending the payment period, reducing the interest rate, or […]

Definition of Debt Relief Debt relief refers to the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. This process can involve reducing the outstanding principal amount (either partly or fully), lowering the interest rate on loans due, extending […]

Definition of Debt Neutrality Debt neutrality, often discussed in the context of Ricardian equivalence, is a theoretical concept in economics suggesting that government borrowing does not affect the aggregate level of demand in an economy. This theory posits that any increase in debt by the government will be offset by […]

Definition of Debt Management Debt management refers to the strategies or processes employed by individuals or entities to handle their debt effectively. This involves the careful planning and execution of actions aimed at reducing or eliminating existing debt, optimizing the cost of debt, and preventing the accrual of new debt […]

Definition of Debt Deflation Debt deflation refers to a scenario where the general price levels in an economy decline (deflation) under the burden of repaying debts. This phenomenon often results in a problematic loop: as prices drop, the real value of debt increases, making it more challenging for borrowers to […]

Definition of Debt Crisis A debt crisis occurs when a country or entity is unable to repay its borrowed money. This situation arises when creditors start to lose faith in the borrower’s ability to pay back the debt, often due to excessive borrowing or inefficient economic management. A debt crisis […]

Definition of Debt Burden Debt burden refers to the size of a country’s or organization’s debt relative to its economic output or revenue. It measures the extent to which the debt is likely to weigh on the economy or the entity’s finances. High levels of debt burden can constrain economic […]