Nonperforming Asset

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed ...
  2. Nonperforming Loan - NPL

    A sum of borrowed money upon which the debtor has not made his ...
  3. Charge-Off

    A term describing an expense on a company's income statement. ...
  4. Write-Off

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

    1. A resource with economic value that an individual, corporation ...
  6. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
Related Articles
  1. Small Business: Speed Up Receivables ...
    Entrepreneurship

    Small Business: Speed Up Receivables ...

  2. What happens if a company doesn't think ...
    Investing

    What happens if a company doesn't think ...

  3. How Our Borrowing Habits Have Changed ...
    Credit & Loans

    How Our Borrowing Habits Have Changed ...

  4. Why should I keep records on my tax-exempt ...
    Taxes

    Why should I keep records on my tax-exempt ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center