Greece is 323 billion euros ($352.7 billion) in debt to other European countries, the European Central Bank and the International Monetary Fund (IMF) -- collectively known as the "troika."
The sum is equivalent to more than 175% of the country's GDP.
Germany is owed the biggest slice of debt
, (56 billion euros), followed by France and Italy.
Biggest debt default by country
Prime Minister Alexis Tsipras' office later released a statement saying Greece had asked for a two year bailout from Europe's rescue fund, the European Stability Mechanism (ESM).
To avoid defaulting, Greece needed to reach an agreement ) for the final 7.2 billion euro ($7.9 billion) installment of a 240 billion euro ($262 billion) European bailout.
But Tsipras walked out of European Union talks Friday, effectively rejecting the latest incarnation of the bailout offer,
which required his anti-austerity government to agree to economic reforms.
What referendum entails
Tsipras has described the proposed terms as "blackmail
" and said he will urge Greeks to vote against the bailout offer in a referendum scheduled for five days time.
The Yes/No referendum
will ask whether the troika's proposal, submitted on June 25, be approved.
With that draft proposal set to expire, Greeks may be voting on a bailout offer that no longer exists and on Monday Tsipras hinted that he might quit
if they back the deal he rejected.
Emergency financial assistance is what has been keeping the Greek economy afloat and the specter of a default has raised fears that Greece may be forced to exit the eurozone -- the so-called "Grexit."
Commentators have suggested a Grexit could lead to other indebted states to also default, undermining the euro currency as well as triggering financial meltdown in Greece itself.
What Greek citizens want
Residents in Athens spoken to by CNN Money last week
expressed contrasting views over a potential Grexit.
"I am worried about austerity. But we owe money, and we have to pay it back, otherwise nobody in Europe will trust us," said Glina Klitoraki.
"We are worried about leaving Europe, it would be very bad for Greece, very bad for jobs. Nobody would come here any more."
Meantime Manolis Spathis, 29, said he had become a full-time activist after six-months of unemployment.
"I want a Grexit [from the eurozone]. I believe that is the only solution. To cancel the debt, the whole debt," he said. "The ECB wouldn't support us anyway. We have to take the first step, cross the line. I think we should nationalize the banking system."
Banks shut, stocks fall
Greece took preemptive measures Monday, closing its banks and markets until July 6 -- a move that concerned global investors, causing European stocks to fall.
The government in Athens also restricted Greek residents to withdrawals of 60 euros per day (U.S$66), leading to queues at ATMs.
Is it safe to holiday in Greece?
Ahead of the potential default, visitors have also been warned to travel with plenty of cash.
With an expected 25 million visitors this year set to contribute up to a quarter of Greece's income in 2015, the country wants to reassure them that their vacations are safe.
"As summer season begins, we are prepared to ensure tourists' safety and enjoyment," Andreas Andreadis, president of the Greek Tourism Confederation