Debt Relief
Definition
Debt relief is when part or all of a debtor's financial obligation is forgiven or postponed by creditors. It often applies to developing countries struggling with large debts.
Analogy
Imagine you borrowed five books from your school library but you're having trouble returning them on time because you have too many other assignments due at once. The librarian might give you an extension (postponement) or forgive your late fees (forgiveness). That's what debt relief does on a much larger scale for countries struggling with debt.
Related terms
Debt Forgiveness: This is when creditors decide not to require repayment from borrowers who cannot afford it.
Debt Restructuring: This involves changing the terms of existing loans such as extending payment periods or reducing interest rates.
Creditor Nations: These are countries that lend money to other nations.
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