An obligation is a legal or financial responsibility that requires an individual or entity to act according to an agreement, such as repaying a loan or performing a service. In the financial context, obligations often refer to debts or contracts that a borrower must fulfill according to set terms. Examples include mortgage payments, credit card balances, and other loan repayments. Failure to meet obligations can lead to penalties, additional fees, or legal action. Managing financial obligations carefully helps maintain creditworthiness and financial stability over time.