recourse debt

Definition

A loan where the lender can come after your other assets if the collateral isn't enough to cover the debt—the financial equivalent of co-signing for your irresponsible cousin. Sleep tight!

Example Usage

The real estate developer regretted signing recourse debt when the property value crashed and the bank started eyeing his personal yacht.

Origin

From legal terminology where 'recourse' means the right to demand payment or compensation.

Fun Fact

Non-recourse debt is much harder to obtain because lenders prefer having multiple targets to chase when things go wrong.

Source: Commercial lending and bankruptcy law

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