Duhaime's Law Dictionary

Debt Definition:

An amount of money due and payable, from one person to another.

Related Terms: Abatement, Debtor, Creditor

The obligation to pay a certain amount of money to another person as a result of a contract or other legal obligation (such as damages resulting from a tort).

The obligation must be due for it to be a debt. Forthcoming rent, for example, is not yet a debt, nor are prospective damages not yet determined by judgment of a court. This distinction can be important as once a money obligation becomes due and payable (a debt), it may be exposed to garnishment.

A person with a debt to another is called a debtor. The person to whom the money is owed, his creditor.

A person who is "debt free" has no creditors; owes money to no other person.

A debt can be guaranteed or secured by a guarantee, indemnity or mortgage.

A debt is canceled by payment of the full amount owing to the creditor.

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