Legal Definitions - liquid debt

Liquid debt refers to a financial obligation where the exact amount owed is certain, fixed, and not subject to reasonable dispute or valuation. This clarity means the debt is readily ascertainable and payable.

Liquid debt refers to a debt where the exact amount owed is certain, clearly established, and immediately due or easily calculable. It is not a disputed amount, nor does it require a court or arbitrator to determine its value. Essentially, it's a debt that is readily quantifiable and payable.

• Example 1: Unpaid Utility Bill

  Imagine Sarah receives her monthly electricity bill for $75. The bill clearly states the amount due, the services rendered, and the payment deadline. There's no dispute about the usage or the cost. This $75 represents a liquid debt because the amount is fixed, certain, and immediately payable.

  This illustrates liquid debt because the utility company has provided a precise, undisputed figure that Sarah owes, making it easily quantifiable and ready for payment.

• Example 2: Outstanding Credit Card Balance

  John checks his credit card statement and sees an outstanding balance of $1,250. This amount includes all purchases, interest, and fees up to the statement date, and it is clearly itemized. John acknowledges these charges as legitimate. This $1,250 is a liquid debt.

  This demonstrates liquid debt because the credit card company has presented a definite, agreed-upon sum that John is obligated to pay, without any ambiguity regarding the amount.

• Example 3: Business Invoice for Services Rendered

  A small marketing firm completes a project for a client and sends an invoice for $5,000, as per their agreed-upon contract. The invoice details the services provided and the fixed fee. The client has no objection to the work or the cost. This $5,000 is a liquid debt.

  This exemplifies liquid debt because the amount owed is explicitly stated in a formal document (the invoice) and aligns with a prior agreement, making it a certain and calculable obligation for the client.