Default
Private Credit glossary · Documentation, Covenants & Terms
Definition
Failure to meet contractual obligations or breach of material covenants.
Default in plain English
Default is what happens when a borrower breaks the deal — most obviously by failing to make a payment they promised, but also by violating an important rule written into the loan agreement (called a covenant, basically a promise like 'I'll keep my debts below this level'). It's the moment the lender officially says 'you're not holding up your end.' Like missing rent or trashing the apartment against your lease, default doesn't always mean the money is gone forever, but it flips the relationship: now the lender can demand repayment, seize collateral, or renegotiate on tougher terms.
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