What are debts?

A debt is an obligation in which one party (the borrower) owes money to another party (the lender) and must repay it, often with interest (is the cost of borrowing money or in other contexts the reward for lending or saving money).

 

Debts can be secured (backed by collateral assets, meaning in case you don’t pay that money the money is although going to be paid from the asset /something you own/) or unsecured (no collateral assets to assure to pay it).

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The amount owed and repayment schedule (that is the time you have to pay it back) can be fixed (a set end date) or revolving (ongoing, like credit cards, where you borrow up to a limit, repay, and borrow again).

 

In everyday language, “debt” also refers to the sense of being “in the red,” or owing more than you currently have.