A debt is a legal obligation for a debtor to pay money or money’s worth to a creditor under an express or implied agreement. A debt may be due and payable, payable prospectively, or a present obligation contingent on a future event. Someone who owes a debt is known as a debtor, and the person/entity to whom it is owed is known as a creditor. In business, creating debt is often necessary for normal functioning, as well as for investment and expansion. However, debt can become unmanageable, and if debtors are unable to pay their debts when they fall due, they are deemed insolvent.
In corporate and insolvency law, debts are usually incurred by choice, where an intent to be bound can be established, and a deliberate act or an omission by the debtor renders the debtor liable for a determined sum.