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The failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture. A breach of a covenant. In context of project financing, a technical default signals a project parameter is outside defined or agreed limits or a legal matter is not yet resolved.


The failure to make payments on a debt. One may default on any debt, such as a mortgage or a bond. Default is a very serious matter and may entitle the lender or bondholder to take possession of one's assets in order to recover the amount lost in principal and interest payments on the debt. Default also has a negative impact on one's creditworthiness in the future.


The failure to live up to the terms of a contract. Generally, default is used to indicate the inability of a borrower to pay the interest or principal on a debt when it is due. See also technical default.


If a person or institution responsible for repaying a loan or making an interest payment fails to meet that obligation on time, that person or institution is in default.

If you are in default, you may lose any property that you put up as collateral to get the loan. For example, if you fail to repay your car loan, your lender may repossess the car.

Defaulting has a negative impact on your credit history and your credit score, which generally makes it difficult to borrow again in the future. In fact, failure to pay on time is the single most important contributor to a poor credit history.

A bond issuer who defaults may not pay interest when it comes due or repay the principal at maturity, or both.


The failure to meet one's obligations in a timely manner. There are several important concepts relating to defaults in the real estate field:

• Leases and mortgages often differentiate between monetary defaults, such as failure to pay money when due, and nonmonetary defaults such as a failure to provide proof of insurance or copies of monthly financial statements. If so, there will be different notice provisions and grace periods for each.

• Unless a sale contract contains language that “time is of the essence,” or one party has made the other aware that time is critical, then a court will ordinarily award a purchaser a reasonable amount of time to complete closing, even if it is past the contract date.

• Some states have statutes allowing collection of attorneys' fees when there has been a default in the contract. Other states require specific language in the contract allowing for collection of attorneys' fees.


Failure of the borrower to honor the terms of the loan agreement.

Lenders usually view borrowers delinquent 90 days or more as in default.

See Payment Problems.

References in periodicals archive ?
Across industries over the coming year, default rates are expected to be highest in the Hotel, Gaming, & Leisure sector in both Europe and the US.
In the US, the dollar-weighted speculative-grade bond default rate stood at 16.
On a loan-by-loan basis, mortgages were least likely to go into default in Marin, San Francisco and Santa Clara counties.
The dissent took issue with the majority's focus on the legal consequences of waiver and default under the lease, maintaining that only the legal consequences of a default under the guaranty were relevant.
The state is much less successful in collecting from default dads, on average, and the wrongly named defaults surely pay the least.
The defaulted securities were grouped by year of original issuance and compared to municipal debt issuance in that year to arrive at cumulative default rates (percentages of bonds that eventually defaulted).
The presence of debt exchanges combined with a relatively small pool of defaults has resulted in some anomalies in the data relating recovery outcomes to seniority.
A couple of large energy loans, as highlighted in our Loans of Concern list, could keep the 2018 sector default rate in double digits, much as they did this year.
In the leveraged loan market, a total of 13 Moody's-rated loan defaulters were recorded in the fourth quarter, sending the 2009 loan default count to 113.
With traditional bonds, the surety is entitled to, and routinely does, investigate the alleged default of its principal (the subcontractor) before taking any action to resolve the situation.
For the year's first nine months, 37,875 property owners across the state received a default notice, down from 51,182 a year ago.
As of year-end (YE) 2008, the cumulative default rate increased to 3.