Debt Loading


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.

BREAKING DOWN '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.

  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. Default Risk

    The event in which companies or individuals will be unable to ...
  4. Unsecured Debt

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