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. Charge-Off

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

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

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

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

    1. The failure to promptly pay interest or principal when due. ...
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. 10 Steps For First-Time Home Buyers
    Home & Auto

    10 Steps For First-Time Home Buyers

  4. Steps To Retiring With A Reverse Mortgage
    Retirement

    Steps To Retiring With A Reverse Mortgage

comments powered by Disqus
Hot Definitions
  1. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  2. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  3. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  4. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  5. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  6. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
Trading Center