This chapter will begin by conceptualizing sovereign default and debt distress and by untangling the various forms of default. It will briefly discuss the determinants of default, focusing on domestic, legal and external variables. Much of the chapter will then explore the various costs of sovereign default, and the factors that that influence this. It will also look at ways to reduce the costs of default and distress as well as the weaknesses and distortions within the existing framework of crisis prevention and resolution. This includes the role of official sector lending policies, domestic politics, creditor identity and the character of the debt.