Inside the 'World of Debt'

2007-12-28T19:05:00.000-08:00

Assuming that most of you know what debt is, lets start off with the different types of debt we have.

There are numerous types of debt, including basic loans, syndicated loans, bonds, and promissory notes. Debt, especially large sums of debt, can also be secured through a mortgage or other security interest over some of the debtor's property, in which case the creditor will have some rights over that property in the event that the debtor becomes unable to repay the debt and defaults on the loan.

A basic loan is the simplest form of debt. It consists of an agreement to lend a principal sum for a fixed period of time, to be repaid by a certain date. In commercial loans interest, calculated as a percentage of the principal sum per annum, will also have to be paid by that date.

In some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid; the additional principal has the same economic effect as a higher interest rate (see point (mortgage)).

A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum.

A bond is a debt security issued by certain institutions such as companies and governments. A bond entitles the holder to repayment of the principal sum, plus interest. Bonds are issued to investors in a marketplace when an institution wishes to borrow money. Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30 years, being less common. At the end of the bond's life the money should be repaid in full. Interest may be added to the end payment, or can be paid in regular installments (known as coupons) during the life of the bond. Bonds may be traded in the bond markets, and are widely used as relatively safe investments in comparison to equity.

Now that we have gone over the various types of debt, I want you to read this over again and again, engraving this to your mind until you COMPLETELY understand what type of debt or debts you may have.

Source: Wikipedia (http://en.wikipedia.org/wiki/Debt)

Our Philosophy

2007-12-28T18:29:00.000-08:00

Has debt consumed you and your lifestyle? Has it thrown you into that vicious never-ending circle that makes you believe you will never come out alive and will have to live paycheck to paycheck until the day you breathe your last breath? Well, think again! There is a way out of it and we will help do just that step-by-step! On this blog, we’ll write and post articles written by various authors, we’ll give you our most superlative advice as well as suggestions, and we’ll also do our best to answer whatever questions you have for us! Debt shouldn’t be a part of your lifestyle... it should be a part of the creditor’s!

The Debtor's Compendium

Inside the 'World of Debt'

Our Philosophy