default

(noun)

The condition of failing to meet an obligation.

Related Terms

Examples of default in the following topics:

  • Being Aware of Off-Balance-Sheet Financing

    • For example, if a company defaults on the rental payments required by an operating lease, the lessor could repossess the assets or take legal action, either of which could be detrimental to the success of the company.

  • Notes Payable

    • Sometimes, provisions are included concerning the payee's rights in the event of a default, which may include foreclosure of the maker's assets.

  • Types of Bonds

    • By early 1990s, junk bonds lost favor as many issuers defaulted on their interest payments.
    • Also called a government bond, this is issued by the Federal government and is not exposed to default risk.

  • Current Obligations Expected to Be Refinanced

    • In some jurisdictions, refinanced mortgage loans are considered recourse debt, meaning that the borrower is liable in case of default, while un-refinanced mortgages are non-recourse debt.

  • Write-Offs

    • Because there is an inherent risk that clients might default on payment, accounts receivable have to be recorded at net realizable value.