debt forgiveness

Examples of debt forgiveness in the following topics:

• The Capital Account

  • Capital transfers include debt forgiveness, the transfer of goods and financial assets by migrants leaving or entering a country, the transfer of ownership on fixed assets, the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and uninsured damage to fixed asset.
  • For example, if the domestic country forgives a loan made to a foreign country, this transfer creates a deficit in the capital account.

• The Balance of Payments

  • Debt forgiveness would affect the capital account, as would the purchase of non-financial and non-produced assets such as the rights to natural resources or patents.

• The Stimulus Package and the Occupy Movement

  • On August 2, 2011, after a lengthy congressional debate over whether to raise the nation's debt limit, Obama signed the bipartisan Budget Control Act of 2011.
  • The legislation enforces limits on discretionary spending until 2021, establishes a procedure to increase the debt limit, creates a Congressional Joint Select Committee on Deficit Reduction to propose further deficit reduction with a stated goal of achieving at least $1.5 trillion in budgetary savings over 10 years, and establishes automatic procedures for reducing spending by as much as $1.2 trillion if legislation originating with the new joint select committee does not achieve such savings.
  • OWS's goals include a reduction in the influence of corporations on politics, more balanced distribution of income, more and better jobs, bank reform (especially to curtail speculative trading by banks), forgiveness of student loan debt or other relief for indebted students, and alleviation of the foreclosure situation.

• Total Debt to Total Assets

  • The debt ratio is expressed as Total debt / Total assets.
  • Debt ratios measure the firm's ability to repay long-term debt.
  • The debt/asset ratio shows the proportion of a company's assets which are financed through debt.
  • If the ratio is greater than 0.5, most of the company's assets are financed through debt.
  • A company with a high debt ratio (highly leveraged) could be in danger if creditors start to demand repayment of debt.

• Debt-to-Equity Ratio

  • The Debt-to-Equity Ratio is a financial ratio that compares the debt of a company to its equity and is closely related to leveraging.
  • The Debt-to-Equity Ratio is a financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets, and is calculated as total debt / total equity.
  • Debt is typically a long-term liability that represents a company's obligation to pay both principal and interest to purchasers of that debt.
  • Calculating a company's debt to equity ratio is straight forward, and the debt and equity components can be found on a company's respective balance sheet.
  • For more advanced analysis, financial analysts can calculate a company's debt to equity ratio using market values if both the debt and equity are publicly traded.

• Corporate Bonds

  • The opposite of secured debt is unsecured debt, which is not linked to any specific piece of property.
  • Senior debt has seniority over subordinated debt in the issuer's capital structure.
  • Subordinated debt is repaid after other debts in the case of liquidation or bankruptcy.
  • Such debt is referred to as subordinate, because the debt providers (the lenders) have subordinate status relative to the normal debt.
  • Because subordinated debt is repaid only after other debts have been paid, they are riskier for lenders.

• Debt to Equity

  • The debt-to-equity ratio (D/E) indicates the relative proportion of shareholder's equity and debt used to finance a company's assets.
  • The formula of debt/equity ratio: D/E = Debt (liabilities) / equity.
  • A similar ratio is the ratio of debt-to-capital (D/C), where capital is the sum of debt and equity:D/C = total liabilities / total capital = debt / (debt + equity)
  • The debt-to-total assets (D/A) is defined asD/A = total liabilities / total assets = debt / (debt + equity + non-financial liabilities)
  • Debt to equity can also be reformulated in terms of assets or debt: D/E = D /(A – D) = (A – E) / E

• The Public Debt

  • Government debt, also known as public debt, or national debt, is the debt owed by a central government.
  • Government debt, also known as public debt, or national debt, is the debt owed by a central government.
  • As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers.
  • Government debt can be categorized as internal debt (owed to lenders within the country) and external debt (owed to foreign lenders).
  • Sovereign debt usually refers to government debt that has been issued in a foreign currency.

• Debt Utilization Ratios

  • In this case, it has a debt ratio of 200%.
  • The debt ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt.
  • When used to calculate a company's financial leverage, the debt usually includes only the Long Term Debt (LTD).
  • D/E = Debt(liabilities)/Equity.
  • The debt service coverage ratio (DSCR), also known as debt coverage ratio (DCR), is the ratio of cash available for debt servicing to interest, principal, and lease payments.

• Striking Agreements to Avoid Bankruptcy

  • In general, creditors understand that bankruptcy is an option for debtors with excessive debt.
  • A debt restructuring is usually less expensive than bankruptcy.
  • Debt restructurings typically involve a reduction of debt and an extension of payment terms.
  • A debtor and creditor could also agree to a debt-for-equity swap, wherein a company's creditors generally agree to cancel some or all of the debt in exchange for equity in the company.
  • This simplifies the debtor's obligations and can result in faster debt repayment.