Legal Definitions - limitation on indebtedness

Limitation on indebtedness refers to a restriction placed on borrowing by an individual, business, or government. It is also known as debt limitation.

For instance, the constitutions of many states in the US prohibit the states from incurring debt beyond a certain amount. In some other states, the constitution allows the states to incur debt above a certain amount only through a vote of the people.

For example, the constitution of California limits the state's indebtedness to 8% of the total assessed value of property in the state. This means that the state cannot borrow more than 8% of the total assessed value of property in the state.

Another example is the debt ceiling imposed by the US Congress, which limits the amount of money the federal government can borrow. The debt ceiling is a statutory limit on the amount of national debt that can be issued by the Treasury.

These examples illustrate how limitation on indebtedness works to prevent individuals, businesses, and governments from borrowing beyond their means and getting into financial trouble.