Legal Definitions - liquidated debt

A liquidated debt refers to a specific amount of money owed that is either precisely determined or can be easily calculated using an agreed-upon formula or standard. The exact sum is not subject to reasonable dispute, even if the obligation to pay it might be. In essence, everyone involved knows or can readily figure out the precise dollar amount that is due.

• Example 1: Unpaid Utility Bill

  Imagine a homeowner receives a monthly electricity bill for $150. The bill clearly details the usage and the rate, resulting in this exact total. If the homeowner fails to pay, the utility company is owed precisely $150.

  This is a liquidated debt because the amount ($150) is fixed and clearly stated on the invoice, based on measurable consumption and a pre-agreed rate. There is no ambiguity about the exact sum owed.

• Example 2: Fixed-Term Loan Repayment

  A small business takes out a loan for $10,000 with a repayment schedule of $500 per month for 20 months. If the business misses a payment for a particular month, the lender is owed $500 for that missed installment.

  The missed payment of $500 is a liquidated debt. The loan agreement clearly specifies the monthly payment amount, making the exact sum owed for that month certain and undisputed.

• Example 3: Unpaid Rent

  A tenant signs a lease agreement to pay $1,200 in rent on the first of each month. If the tenant fails to pay rent for a particular month, the landlord is owed $1,200.

  The $1,200 owed for that month's rent is a liquidated debt. The lease agreement explicitly states the exact amount of rent due, leaving no room for dispute regarding the sum itself.