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Nonperforming Asset

Definition - What does Nonperforming Asset mean?

A nonperforming asset is one where the loan against the asset is not repaid, nor the interest on the asset, for a period of over 90 days. This differentiation is in contrast to a loan in which the payments are made on time. Legally speaking, a lender can force the default of a nonperforming asset and insist that the full amount of principal and interest are repaid immediately. This, in turn, can lead to a foreclosure or even bankruptcy in certain circumstances.

Justipedia explains Nonperforming Asset

The law allows for a lender to pursue a borrower legally for the repayment of the outstanding monies at the point where the asset becomes nonperforming (after 90 days overdue). If this is pursued the borrower would also be responsible for any legal costs incurred by the buyer.

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