Definition of Ability to Pay

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Debt Consolidation and Financial Services Definitions:


Related Financial Services - The following list of company and services directories offer a wide variety of programs for consolidating bills and other similar services, such as a getting a mortgage refinance interest rate quote from a lender or an online quote for life or car insurance.

  • Debt Consolidation Help - Learn about the debt consolidation process and review detailed listings for lenders and services offering to help consolidate your debts.
  • Personal Loan Companies - Looking for a smaller loan for the consolidation of debt? Start your search at the directory of personal loans, where you can compare and apply online with different lenders and related companies.

Ability to Pay definition

Define Ability to Pay: The phrase "ability to pay" is a financial term indicating a borrower's financial ability to repay a debt, such as a personal loan for debt consolidation or their mortgage. When issuing a loan, the finance company, lender or banking institution will perform some type of review to determine the prospective borrower's "ability to pay" or in other words, financial ability to make timely and adequate loan repayments.


If, in the process of underwriting the loan, the prospective borrower's "ability to pay" is determined to not be sufficient, the financial institution will either decline to offer the loan or will sometimes offer the loan at an increased rate or with different terms.


Also, during bankruptcy proceedings, creditors may seek to establish the bankrupt party's "ability to pay" on all or some of the contested debt.



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