Debt Loading

AAA

DEFINITION of 'Debt Loading'

A practice employed by unscrupulous entrepreneurs and businesses who anticipate filing for bankruptcy. Debt loading works by taking on a debt load by spending all cash reserves, maxing out lines of credit and credit cards, and failing to pay bills in anticipation of bankruptcy protection.

INVESTOPEDIA EXPLAINS 'Debt Loading'

There are laws to prevent this type of behavior. For example, personal debt acquired within 90 days of filing for bankruptcy may be excluded from legal protection.

RELATED TERMS
  1. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Unsecured Debt

    A loan not backed by an underlying asset. Unsecured debt includes ...
  4. Default Risk

    The event in which companies or individuals will be unable to ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Debtor

    A company or individual who owes money. If the debt is in the ...
Related Articles
  1. Insurance

    How To Find A Credit Counselor

    Paycheck to paycheck is no way to live. Learn how to find the help you need.
  2. Budgeting

    Stop Keeping Up With The Joneses - They're Broke

    Conspicuous consumption could be robbing you of future wealth.
  3. Budgeting

    How Much Debt Can You Handle?

    Follow these five steps to manage debt without cutting up your credit cards.
  4. Budgeting

    Negotiating A Debt Settlement

    If you're being harassed by a debt-collection agency, you can take charge. Find out how.
  5. Budgeting

    5 Signs That You're Living Beyond Your Means

    Learn what to watch for before you find yourself drowning in debt or filing for bankruptcy.
  6. Retirement

    Bankruptcy Protection For Your Accounts

    Will the plan assets you've worked hard for be safe if you experience a personal financial crisis?
  7. Options & Futures

    Bloated Budget? How To Trim The Fat

    Blood, sweat and tears should belong in the gym, but your money deserves some training time too.
  8. Credit & Loans

    A Guide To Debt Settlement

    Find out how you can negotiate your way to a lower debt load by paying up front.
  9. Budgeting

    Debt Consolidation Made Easy

    These five steps can help get you out of debt faster and easier than you'd ever imagined.
  10. Retirement

    Two Roads: Debt Or Financial Independence?

    A higher income won't make you richer - unless you learn to live on less.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center