Nonperforming Asset


DEFINITION of 'Nonperforming Asset'

A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments.


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BREAKING DOWN 'Nonperforming Asset'

For example, a mortgage in default would be considered non-performing. After a prolonged period of non-payment, the lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets were pledged, the lenders might write-off the asset as a bad debt and then sell it at a discount to a collections agency.

  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed ...
  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. Charge-Off

    A term describing an expense on a company's income statement. ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Write-Off

    A reduction in the value of an asset or earnings by the amount ...
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