Debt can be viewed as good and sometimes also can bad too. Debt makes people and organizations that they would not allowed to do. All this while, people use it to purchase houses, cars, and others things with their cash on hand. With the debt, they can spend as much as they want on expensive things.

Besides, for those companies also use the debt as to influence the investment made in their assets. This influence of debt is considered as an important part in determining the riskiness of the investment. As we know that, the more the debt per equity, the more risky we will face. The increased of risks will bring some bad effects to organizations as well as individuals. As for individuals, the cost of servicing the debt can grow beyond the ability to pay due to both external events and this cause their income loss. And there will be internal difficulties for the organizations as their poor management of the resources.

Debts will also bring some bad results to the economic systems. For example, excesses in debt accumulation in the economy. The prior to the beginning of the Great Depression debt ratio was very high. This excess of debt can describe as to excessive expectations on future returns, accompanied asset on the stock market. When the expectations is corrected, there will be followed by deflation. Deflation can cause the debt become more expensive. Through this way, many of the economic agents will reduce their consumption and investment in order to decrease their debt level. And by this reduction in demand, will reduce the business activity and cause further unemployment. In more details, this will bring more bankruptcies due to the both increased on debt cost due deflation and the reduced demand.

It is very vital for the organizations to enter into alternative types of borrowing and repayment arrangements which will not result in bankruptcy. For example, the organization can convert debt that they owe into equity in themselves. By doing this, the creditors can regain something same to the debt and interest in the form of dividends and capital gains of the borrower.