Indebtedness refers to a state or condition in which an individual, organization or government owes money to another person or entity. This can be due to borrowing funds through loans, credit cards or other forms of debt. The term is often used to describe the level of financial obligation that someone has and may indicate their inability to repay what they owe. In some cases, indebtedness can lead to negative consequences such as poor credit ratings, legal action or bankruptcy if left unresolved.