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

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. [Blacks Law 8th]