Legal Definitions - liquid debt

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.