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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 ?
In comparison, only 34 loan issuers defaulted in 2008, all of which were North American.
Fitch IBCA then grouped the defaulted debt by date of original issuance and compared it to new issue volume data for bonds and notes published in editions of The Bond Buyer
Thus, it is well settled that before a broker may properly rely upon "willful default" language in a brokerage agreement, such as the agreement in this case, the broker must demonstrate that a sales contract existed between the buyer and the seller upon which the seller could be said to have defaulted.
Because students were graduating owing an average $10,000 for an undergraduate education and a staggering $35,000 for graduate degrees, they frequently defaulted, in part because the size of their monthly payments was fixed without regard to their incomes.
The average size of bonds outstanding per defaulted issuer has fallen to $265 million this year versus $786 million per defaulted issuer in 2009.
In all, a total of 32 Moody's-rated corporate debt issuers defaulted in the fourth quarter, which sent the 2009 default count to a record high of 266.
Although one in five people given student loans while attending College of the Canyons have defaulted on their repayment, the campus improved its status and thus remained eligible for the federal program.