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LSDefine
Simple English definitions for legal terms
evidence of debt
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A quick definition of evidence of debt:
Evidence of debt is something that shows that someone owes money to someone else. It can be something valuable that is given as a guarantee that the person who borrowed the money will pay it back. This is called collateral. Evidence of debt can also be a piece of paper that shows how much money is owed and when it needs to be paid back. This paper is called a security. Securities can be things like stocks or bonds, which show that someone owns a part of a company or government and will get paid back with interest.
A more thorough explanation:
Evidence of debt is a type of security that shows someone owes money to another person or organization. It is a way for the creditor to have assurance that they will be repaid the money they lent, usually with interest.
Examples of evidence of debt include:
- Bonds
- Notes
- Certificates of deposit
- Debentures
These examples illustrate the definition because they are all documents that show someone owes money to another person or organization. For instance, a bond is a type of evidence of debt that a company issues to raise money. When someone buys a bond, they are essentially lending money to the company and the bond serves as evidence of that debt.