When is a debt considered unpaid?
Last updated February 20, 2024
Understanding the precise moment when a debt can be defined as unpaid holds significant legal and financial importance.
What are the essential criteria that determine when a debt can be qualified as unpaid ?
The nature of the debt : A debt is the right of a creditor to receive payment from their debtor. It can result from a commercial transaction, services rendered, and more. For a debt to be considered unpaid, it must meet certain fundamental criteria.
📌Criteria for an unpaid debt :
a) Due date : A debt becomes unpaid when the due date for payment has passed. If the debtor fails to settle the debt on time, the debt may be considered unpaid.
b) Certainty : The debt must be certain, meaning it should be clearly established and identifiable.
c) Liquidity : A liquid debt is a definite and quantifiable sum of money. If the amount owed is fixed and clearly defined, the debt can be considered unpaid if it is not settled by the due date.
d) Due and Payable : A debt becomes unpaid when it is due and payable. This means that the creditor can legitimately claim the payment, and the debtor is obligated to fulfill it.