On today’s show, we are talking about four ways to liquidate debt. Our entire economy is driven by access to credit. Credit facilities of all types are essentially a claim on future earnings. I don’t have the money today, but I will in the future if you lend me some of that excess money that you are not using right now, I’ll give it back to you with extra in exchange for letting me use those funds today. It doesn’t matter cause weather the borrower is an individual, corporation, charitable, organization, or the government of a sovereign nation.
There are four ways to liquidate a debt obligation.
1. You can repay the debt to future earnings and rely upon your week to week months to months, cash flow to service that debt and repay both interest and principal over the life of the loan.
2. You can rely upon a capital transaction to provide a source of funds to repay the loan.
3 You can wipe out the debt through an active insolvency by seeking bankruptcy protection.
4. You can inflate away the debt.