What is debt?

Debt refers to the amount of money or obligation that an individual or entity owes to another party. It is typically incurred when borrowing funds or taking on financial commitments, such as loans, credit cards, mortgages, or other forms of financial agreements. Debt can also include unpaid bills or expenses that have not been settled. The debtor usually agrees to repay the borrowed amount along with any interest or fees within a specified period. Failure to make timely payments can result in penalties, impacting credit scores and future borrowing opportunities. Debt can vary in size and type, ranging from personal debt to corporate debt, and managing it effectively involves budgeting, timely payments, and seeking debt relief options if necessary.