Person or entity has a compulsory agreement to pay a debt to another party. The party being paid the debt is known as a creditor. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower, and if it´s in the form of a security, the debtor is referred to as an issuer.
When the debtor has not met their legal obligations according to the debt contract, they are in default, which means they haven´t paid the debt on time. A default is not the same as insolvency or bankruptcy.
There are generally two types of default;