Debt Bomb


DEFINITION of 'Debt Bomb'

This occurs when a major financial institution, such as a multinational bank, defaults on its obligations that causes disruption not only in the financial system of the institution's home country, but also in the global financial system as a whole.


A debt bomb can occur also if consumer spending is based heavily on debt. For example, if a nation incurred huge credit card debt, individual debt holders could default en masse and create trouble for creditors.

  1. Credit Card

    A card issued by a financial company giving the holder an option ...
  2. Debt

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

    1. The failure to promptly pay interest or principal when due. ...
  4. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
  5. Bankruptcy

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

    The event in which companies or individuals will be unable to ...
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  1. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  2. Will my credit score suffer from debt consolidation or refinancing?

    You have several options for reducing your debt burden. You can enroll in a professional debt management plan, or consider ... Read Full Answer >>
  3. Can I file for bankruptcy more than once?

    Filing bankruptcy is never a simple decision, but sometimes it is the best thing you can do in your current financial situation. ... Read Full Answer >>
  4. Does consumer protection cover my debts?

    The most impactful consumer protection laws and regulations in the United States are overseen by the Federal Trade Commission ... Read Full Answer >>
  5. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
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