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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 ?
Among US speculative-grade issuers, Moody's forecasting model foresees the default rate falling to 2.
Measured on a dollar volume basis, the European speculative-grade bond default rate rose to 8.
On primary mortgages, homeowners were a median five months behind on their payments when the lender started the default process.
There is no reason why non-waiver clauses should not apply to circumstances such as those here, to permit a landlord to accept untimely rent payments and continue the tenancy without "having such acceptance brandished as evidence of intent to waive a default.
How low is the legal threshold for placing men in the cross hairs of default justice?
0 percent in the later period, the difference being explained by two extremely large defaults (WPPSS and Tucson Electric) from the earlier 1979-1986 period.
The institutional loan retail universe is nearly $20 billion larger in size than high yield and should produce twice the amount of default volume next year.
Under its baseline scenario, Moody's forecasting model now predicts that the default rate for U.
Rather, so long as the insurance company is provided timely written notice of the default, a resolution can be implemented and proof of the loss incurred (i.
Lenders issued an average of 3,500 default notices monthly from April though September across the state.