Simple English definitions for legal terms
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Desperate debt is a type of debt that is either uncollectible or taken on by someone who is insolvent or on the verge of insolvency.
For example, if a person has borrowed a large amount of money and is unable to pay it back, the debt may become desperate. Similarly, if a business is struggling financially and takes on more debt to stay afloat, that debt may also be considered desperate.
Desperate debt is a risky type of debt because it is unlikely to be repaid. Lenders may be hesitant to lend money to someone with a history of desperate debt because of the high risk of default.