The United states debt default occurs when United States has not met its legal obligations, according to their debt contract, for example, has not made or has violated a loan covenant (condition) of the debt contract. A default is the failure make a scheduled payment, to pay back a loan. If the United States government defaults it will lose its ability to borrow and will be required to meet its obligations relying only on cash on hand and incoming tax receipts.
Reference: http://www.news.com.au/business/markets/us-on-brink-as-debt-default-deadline-closes-in-on-washington/story-e6frfm30-1226740636153
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