MS&E 147 Lecture Notes - Lecture 4: Chapter 11, Title 11, United States Code, Repo 105, Repurchase Agreement
Document Summary
Creditor: general term for those owed money, suppliers for goods services who have not been paid. Lender who bought the debt from original lender might wait, penalty, send reminders, debt collectors. What matters: loan size, who borrower is, ability to pay. Corporate borrowing: no investment in larger projects, innovation and risk. Liquidity issues: cannot convert assets to cash quickly. Interest rates - if too high then can only pay that much, or pay in future. Borrower"s assets worth significantly less than debts. Borrower income not enough to pay debt. Assets are there - come to some agreement. Insolvency: there is more chance nothing will be paid. Balance point between punishment and forgiving debts - may encourage excessive risk taking in places without ample and sufficient court systems. Keep track and just pile on interest, borrow again and again. Low interest rates generally - to get student loan to pay other debt.