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What's the difference between "good" debt and "bad" debt?
I have generally operated under the assumption that debt is always bad, what kind of debt can be 'good' for a business? How is this different from 'bad' debt?
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5 Answers
The term "good" debt refers to debt that is maintained in current good standing (i.e. mortgage, car loan, credit card, etc.). "Good" debt may improve your overall credit rating as long as it is kept in good standing.
The term "bad" debt refers to debt that has not been maintained and is delinquent or defaulted (i.e. any of the above examples that are past due, collection, etc.).
Debt may be considered delinquent as soon 1-10 days past due. Defaulted debt varies on the terms of the original agreement; 91 days delinquent is typically considered default but default may be as soon 31 days or less.
Feel free to contact me directly if you would like to discuss further.
Eric Schoep, RRP
Marketing Director
Conrad Companies
http://www.conradco.com
eschoep@conradco.com
You hit the nail on the head!!
I agree with John.
I specialise in unsubordinated bank debentures. some people refer it as unsubordinated debt.
Mark
Here is a good article on the topic from Money Magazine
http://money.cnn.com/magazines/moneymag/money101/lesson9/index2.htm
“What's the difference between "good" debt and "bad" debt?” ____________________________________________________________
"Good Debt" is cheap, unemcumbered and long term; :Bad Debt" is, expensive, encumbered and short term.
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