1. Combining two or more debts to create one total debt. Defalcation can be legally carried out upon request or in death of one of the parties.

2. Theft or misuse of funds which were under the control of the defalcator but not owned by them. Defalcation is a form of embezzlement through the allocation of funds, or failure to account for received funds.

1. For example if Peter had a $100 debt to Diana and Diana had a debt to Peter for $14, the debt could be combined. Peter would then owe Diana $86. This is not always legally possible without the consent of both parties.

2. The term defalcation is usually used in the context of public officials misappropriating public funds. There is a requirement of one party to be in control of someone else's account while allocating the funds in an inappropriate manner.

Investment dictionary. . 2012.

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Look at other dictionaries:

  • défalcation — [ defalkasjɔ̃ ] n. f. • 1307; lat. médiév. defalcatio, de defalcare ♦ Action de défalquer. ⇒ décompte, déduction. Défalcation faite des frais, il vous reste tant. ● défalcation nom féminin (latin médiéval defalcatio, onis) Action de défalquer ;… …   Encyclopédie Universelle

  • defalcation — de·fal·ca·tion /ˌdē ˌfal kā shən, ˌfȯl , di ; ˌde fəl kā shən/ n [earlier, deduction, lessening, shortcoming, from Medieval Latin defalcatio discounting of debt, from defalcare to cut down, deduct, from Latin de away from + falc , falx sickle] 1 …   Law dictionary

  • defalcation — de‧fal‧ca‧tion [ˌdiːfælˈkeɪʆn ǁ ˌdɪːfælˈkeɪʆn, ˌdefl ] noun [uncountable] LAW when someone who has been trusted to take care of money steals it or uses it dishonestly * * * defalcation UK US /ˌdiːfælˈkeɪʃən/ noun [U] ► LAW the taking or… …   Financial and business terms

  • défalcation — DÉFALCATION. s. f. Déduction, retranchement. Sur le produit de cette terre, il faut faire la défalcation des faux frais …   Dictionnaire de l'Académie Française 1798

  • Defalcation — De fal*ca tion, n. [LL. defalcatio: cf. F. d[ e]falcation.] 1. A lopping off; a diminution; abatement; deficit. Specifically: Reduction of a claim by deducting a counterclaim; set off. Abbott. [1913 Webster] 2. That which is lopped off,… …   The Collaborative International Dictionary of English

  • Defalcation — Defalcation, lat., Abschneiden, Abziehen, Verkürzen; Verb: defalciren …   Herders Conversations-Lexikon

  • defalcation — mid 15c., from M.L. defalcationem (nom. defalcatio), from pp. stem of defalcare, from DE (Cf. de ) + L. falx, falcem sickle, scythe, pruning hook …   Etymology dictionary

  • defalcation — [dē΄fal kā′shən, dē΄fôlkā′shən] n. [ML defalcatio: see DEFALCATE] 1. embezzlement 2. the amount embezzled …   English World dictionary

  • Defalcation — A defalcation is an amount of funds misappropriated by a person trusted with its charge; also, the act of misappropriation, or an instance thereof. The term is more specifically used by the United States Bankruptcy Code to describe a category of… …   Wikipedia

  • defalcation — Including embezzlement and misappropriation but a broader term than either. Re Butts (DC NY) 120 F 966, 970. As used in the provision of the bankruptcy act excepting debts created by defalcation from the effect of a discharge, defalcation was… …   Ballentine's law dictionary

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