Meaning of Debt
The term debt refers to the liabilities of an individual or a corporate body. However, debt is a kind of asset for the creditors. Debt is normally given by a creditor with the expectation that the debtor would pay it back. Nowadays, under normal circumstances, debt needs to be repaid with an amount of interest. The interest rate is normally fixed by the creditor when the contract is made.Short Term Debt
Long Term Debt
The long-term debts are those liabilities, whose tenure exceeds one year. In the United Kingdom the long-term debts are also called “long term loans”.Debt Repayment
There are different modes of debt repayment. Debt repayment is normally done through cash or goods. Debt repayment is an extremely important part of debts. Prior to debt settlement the debtor and the creditor determine the various terms and conditions of debt repayment.Debt to Income Ratio
A debt to income ratio is primarily a certain percentage of the income of a debtor that is used by the debtor to pay off the debts. There are two kinds of debt to income ratio – the front ratio and the back ratio.The front ratio is used in order to denote the expenses incurred in the various types of housing costs. This ratio is applied to both homeowners and the people who rent their homes.
The back ratio is normally used to point at the expenses that are being incurred to pay off the various outstanding dues.
