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When you owe somebody something,you are in debt,when you owe others money,you have a financial debt.For financial debts there are many kinds of form,such as a loan,when lenders lend money to borrowers,those borrowers turn to be debtors.You use a credit card to buy some stuffs when you do not have enough balance,the credit card company lend you some money,so you can buy the stuffs you want to have,but just in that case,you have a financial debt.
Legal lenders and debtors always have an agreement to cover the loan,according to the agreement,debtors need to repay the money and interest to lenders in a special period.
Debts can be established between,individual,firms and even countries.And it can be dedicated into unsecured or secured,public or private.Unsecured loan mostly do not have anything as collateral for loans,while secured loans mostly require a collateral,for example the land.Normally,secured loans charge low interest,and unsecured loans require high interest rate.When the borrower can not process a repayment,secured loan allow the lender to sell the collateral,the loan can be covered by the sales.
Updated On 6th Aug,2009.
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