Owing someone is never really a pleasant experience or feeling, especially when you don't have the capacity to pay back afterall. There are various ways that debts arise, but generally, a debt is when you owe someone or somepeople something, mostly having economic value. See debt like this, you are pulling resources that you might have in the future, and bringing it to present to work for you.
Debts arise from lending and borrowing. One critical factor that should be addressed before this kind of transaction is carried out is, will the other party be able to pay back? Many of the crisis that arise from borrowing and lending is that sometimes, the debtor might not be able to pay back as and at when due. That is why creditors adopt several measures to ensure that they get their money back. One of such measures is insurance. Payment Protection Insurance is set up to cover currently outstanding debt. The PPI Claims is however not specific to a debt, but it covers any income. Many times this insurance is sold alongside the loan by the creditor, which is usually the banks. The banks often issue this loan as an overdraft to the customer and sell the insurance alongside the loan.
Some companies, even big corporations often use debt to power their operations. However, many times they have the capacity to pay back because they have adequate measures that ensure that they can repay when their loan is due for repayment. It is often part of their overall corporate finance strategy.
There are different kinds of debts, with each having its own peculiar conditions and working systems. Basically there are three types of debts: secured and unsecured debt, syndicated and bilateral debt, private and public debt. If a creditor, according to the agrrement, can lay claim or take over property owned by the debtor if he doesn't pay back as stipulated, then such is referred to as secured debt; otherwise it is called unsecured when such is not applicable.
Because debt is often denominated in a particular currency, therefore, a certain change in the value of such currency can affect the size of the debt. This may either be favourable for the debtor, or the creditor, depend on which side the currency's value slides.