DEFINITION of 'Arrearage'

An amount on a loan, cumulative preferred stock or any credit instrument that is overdue.

Also referred to as "arrears".

BREAKING DOWN 'Arrearage'

In the case of a preferred dividend, if the company does not pay the dividend to its shareholders, it accumulates. This means that in the future, arrearage must be paid before any dividend can be paid on common stock.

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