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. How Does A Reverse Mortgage Work?
    Retirement

    How Does A Reverse Mortgage Work?

  4. Do payday loans hurt my ability to get ...
    Credit & Loans

    Do payday loans hurt my ability to get ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center