The money due from one person to another, in which one Party is under obligations to pay certain sum of money at a certain period of time, is related to as debt. Interest is also paid to the lender along with principal amount. Interest is charged under profit and loss account and the Principal amount is included under liability side of balance sheet. Thus, a debt can be defined as an amount owed to a person or organization for funds borrowed. Debt can be represented by a note, bond, loan mortgage or other forms stating repayment terms and, if applicable, interest requirements. The borrowings may include both short-term borrowings and long term borrowings. A debt is created when a creditor agrees to lend a sum of assets to a debtor. There are various types of debt which can be generally categorized into, secured and unsecured debt, private and public debt, syndicated and bilateral debt. Debt is normally denominated in a particular monetary currency, and also results in the changes of valuation of that currency and effective change the size of the debt. This situation occurs due to inflation or deflation, and so it can arise even though the borrower and the lender are using the same currency. Recovery of debts is the step taken according to the court of law which includes using solicitors, debt recovery agents and pursuing a legal claim.