HopefullyInLawSchool
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Simple English definitions for legal terms
long-term debt
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A quick definition of long-term debt:
Long-term debt is money that someone owes and will not have to pay back for a year or more. It is usually used to buy big things like a house or a car. This is different from short-term debt, which is money that someone owes and has to pay back within a year. Long-term debt can be secured, which means the person who lent the money can take something away if the borrower doesn't pay it back, or unsecured, which means there is no specific thing the lender can take away.A more thorough explanation:
Long-term debt refers to a type of debt that is not due for payment within the next year. It is a liability on a claim, which means a specific sum of money that is owed by agreement or otherwise.
Examples of long-term debt include:
- Bonds or debentures
- Mortgages
- Bank loans with a repayment period of more than one year
These examples illustrate long-term debt because they are all debts that are not due for payment within the next year. For instance, a bond is a type of long-term debt that is issued by a company or government and has a maturity date of more than one year. This means that the bondholder will receive their principal investment plus interest after a certain period of time, usually several years.