Generally, a debt is any amount which one party known as the debtor, owes a second party, referred to as the creditor. It is usually regarded in accounting as assets owed, and it is created when a creditor agrees to lend a sum or assets to a debtor.
In finance, debt is usually granted with expected repayment in modern society and in most cases, of the original sum plus interest.
It is also a means of using anticipated future purchasing power in the present before it has actually been earned, and most companies and corporations use it as part of their overall corporate finance strategy.
A debt can either be secured, if it is collaterised or unsecured, where no collateral is available and it allows individuals and businesses to engage in transactions that they would, ordinarily, not able to do. For instance, while corporate firms in industrialised countries use it to expand their operations, it is, often times, used by individuals to purchase houses, cars and many other valuables. Read more