DEBT

debt.

1. Liability on a claim; a specific sum of money due by agreement or otherwise (the debt amounted to $2,500).

2. The aggregate of all existing claims against a person, entity, or state (the bank denied the loan application after analyzing the applicant’s outstanding debt).

3. A nonmonetary thing that one person owes another, such as goods or services ( her debt was to supply him with 20 international first-class tickets on the airline of his choice).

4. A common-law writ by which a court adjudicates claims involving fixed sums of money (he brought suit in debt).

— Also termed (in sense 4) writ of debt. [Cases: Debt, Action of

1. C.J.S. Debt, Action Of §§ 1–2, 7–11.]

“The action of debt lies where a party claims the recovery of a debt; that is, a liquidated or certain sum of money due him. The action is based upon contract, but the contract may be implied, either in fact or in law, as well as express; and it may be either a simple contract or a specialty. The most common instances of its use are for debts: (a) Upon unilateral contracts express or implied in fact. (b) Upon quasi-contractual obligations having the force and effect of simple contracts. (c) Upon bonds and covenants under seal. (d) Upon judgments or obligations of record. (e) Upon obligations imposed by statute.” Benjamin J. Shipman, Handbook of Common-Law Pleading § 52, at 132 (Henry Winthrop Ballantine ed., 3d ed. 1923).

active debt. Civil law. A debt due to another person.

ancestral debt. An ancestor’s debt that an heir can be compelled to pay.

antecedent debt.

1. Contracts. An old debt that may serve as consideration for a new promise if the statute of limitations has run on the old debt. See PREEXISTING-DUTY RULE. [Cases: Contracts 67. C.J.S. Contracts §§ 121–122.]

2. Bankruptcy. A debtor’s prepetition obligation that existed before a debtor’s transfer of an interest in property. • For a transfer to be preferential, it must be for or on account of an antecedent debt. See PREFERENTIAL TRANSFER. [Cases: Bankruptcy 2612. C.J.S. Bankruptcy §§ 142–143.]

bad debt. A debt that is uncollectible and that may be deductible for tax purposes. [Cases: Internal Revenue 3420. C.J.S. Internal Revenue § 275.]

bonded debt. A debt secured by a bond; a business or government debt represented by issued bonds.

community debt. A debt that is chargeable to the community of husband and wife. See COMMUNITY PROPERTY. [Cases: Husband and Wife 268.]

consumer debt. A debt incurred by someone primarily for a personal, family, or household purpose. [Cases: Bankruptcy 2185, 2254, 2618. C.J.S. Bankruptcy §§ 55, 150, 348.]

“What are ‘consumer’ debts? Section 101(8) defines a consumer debt as follows: ‘consumer debt means debt incurred by an individual primarily for a personal, family, or household purpose.’ The touchstone is the debtor’s use of the money. The nature of the collateral, the business of the creditor and the form of the loan are all irrelevant. A loan of $25,000 from a Credit Union to pay for a child’s education is a consumer debt, but the same loan used to finance the opening of an accounting business is not a consumer debt. This is so irrespective of the nature of the collateral put up for the debt.” David G. Epstein et al., Bankruptcy § 7-45, at 579 (1993).

contingent debt. A debt that is not presently fixed but that may become fixed in the future with the occurrence of some event.

convertible debt. A debt whose security may be changed by a creditor into another form of security.

debt by simple contract. See simple-contract debt.

debt by special contract. See special-contract debt.

debt by specialty contract. See special-contract debt.

debt of record. A debt evidenced by a court record, such as a judgment.

desperate debt.

1. Uncollectible debt.

2. A debt taken on by one who is either insolvent or on the verge of insolvency.

exigible debt. A liquidated and demandable debt; a matured claim.

fixed debt. Generally, a permanent form of debt commonly evidenced by a bond or debenture; long-term debt.

— Also termed fixed liability.

floating debt. Short-term debt that is continuously renewed to finance the ongoing operations of a business or government.

fraudulent debt. A debt created by fraudulent practices.

funded debt.

1. A state or municipal debt to be paid out of an accumulation of money or by future taxation. [Cases: Municipal Corporations 951. C.J.S. Municipal Corporations §§ 1704–1705.]

2. Secured long-term corporate debt meant to replace short-term, floating, or unsecured debt.

general debt. A governmental body’s debt that is legally payable from general revenues and is backed by the full faith and credit of the governmental body. [Cases: Municipal Corporations 894. C.J.S. Municipal Corporations §§ 1634, 1934.]

hypothecary debt. A lien on an estate.

individual debt. (usu. pl.) Debt personally owed by a partner, rather than by the partnership. [Cases: Partnership 144. C.J.S. Partnership § 159.]

installment debt. A debt that is to be repaid in a series of payments at regular times over a specified period.

judgment debt. A debt that is evidenced by a legal judgment or brought about by a successful lawsuit against the debtor.

legal debt. A debt recoverable in a court of law.

liquidated debt. A debt whose amount has been determined by agreement of the parties or by operation of law.

liquid debt. A debt that is due immediately and unconditionally.

long-term debt. Generally, a debt that will not come due within the next year.

mutual debts. Cross-debts of the same kind and quality between two persons. Cf. SETOFF(2).

national debt. See NATIONAL DEBT.

nondischargeable debt. A debt (such as one for delinquent taxes) that is not released through bankruptcy. [Cases: Bankruptcy 3341–3362. C.J.S. Bankruptcy §§ 316–336, 344, 348.]

passive debt. A debt that, by agreement between the debtor and creditor, is interest-free.

preferential debt. A debt that is legally payable before others, such as an employee’s wages.

privileged debt. A debt that has priority over other debts if a debtor becomes insolvent; a secured debt.

public debt. A debt owed by a municipal, state, or national government. [Cases: Municipal Corporations 869. C.J.S. Municipal Corporations § 1609.]

pure debt. See pure obligation under OBLIGATION.

secured debt. A debt backed by collateral.

short-term debt. Collectively, all debts and other liabilities that are payable within one year.

— Also termed current liability.

simple-contract debt. A debt that is either oral or written but is not of record and not under seal.

— Also termed debt by simple contract.

special-contract debt. A debt due, or acknowledged to be due, by an instrument under seal, such as a deed of covenant or sale, a lease reserving rent, or a bond.

— Also termed debt by special contract; debt by specialty contract; specialty debt.

“Any contract in short whereby a determinate sum of money becomes due to any person, and is not paid but remains in action merely, is a contract of debt. And, taken in this light, it comprehends a great variety of acquisition; being usually divided into debts of record, debts by special, and debts by simple contract.” 2 William Blackstone, Commentaries on the Laws of England 464 (1766).

subordinate debt. A debt that is junior or inferior to other types or classes of debt.

unliquidated debt. A debt that has not been reduced to a specific amount, and about which there may be a dispute.

unsecured debt. A debt not supported by collateral or other security.