Debt default

Definition debt default: When a country, firm or individual fails to make its debt payments either in total or partial. Debt default can lead to bankruptcy or insolvency. This can mean the firm will not be able to trade. A country cannot be made bankrupt, but it will make it more difficult to arrange loans in the future. Also, other lenders may want to withdraw their investments causing a run on the currency.

Lenders may seek to avoid debt default by rescheduling debt repayments, as this often increases the chance of getting their loans back.

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