Which of the following is a default?
A) repaying a debt before it is due
B) bankruptcy of the debtor
C) increase of rate of interest by the creditor midway through debt repayment
D) theft of the collateral

Question

Quizplus · Accepted Answer

A default refers to the failure of the debtor to make timely payments as agreed in the debt contract. Bankruptcy of the debtor is a common default that occurs when the debtor is unable to pay their debts and is legally declared insolvent. Repaying a debt before it is due (A) is not a default but rather a responsible repayment behavior. Increase of rate of interest by the creditor midway through debt repayment (C) is a breach of contract by the creditor and not a default by the debtor. Theft of collateral (D) may result in the creditor losing their security for the debt, but it is not a default by the debtor.

Which of the Following Is a Default