Debt

( debitum )

That which is owed or due to another; in general, anything which one person is under an obligation to pay or render to another. In a wide sense of the word this obligation may arise from a variety of sources. Thus we say that one who has received a favour from another lies under a debt of gratitude to make him some return for it. The superfluous wealth of the rich is due to the poor ; it is a debt to the payment of which, according to the expression of many Fathers and theologians, the poor have a right, not of justice but of charity. We here take the word in the ordinary and strict sense, according to which it signifies something which is due to another in justice. We treat the matter, too, from the ethical rather than from the legal point of view, and so we consider debts of honour as true debts though they cannot be enforced in the civil court.

A debt arises not merely from a contract of borrowing; something may be due to another in justice for many different reasons, but all these may be reduced to two. When one has wilfully caused unjust damage to another, he is bound to make good the loss which he has inflicted, and when he finds himself in possession of what belongs to another, he must restore the property to its owner. Justice requires this, that each one should have his own, and one who has suffered loss unjustly at the hands of another has not his own, as long as the loss is not made good, any more than one whose property is unjustly detained by another. A state of indebtedness, then, of one to another arises from either of these two roots, as theologians call them. A debt must be paid to the owner of the property or to one who has the right to receive payment for him. Sometimes, however, the true owner is unknown, and then payment must be made to the poor or to charitable purposes. At any rate, one who is the unjust cause of wrong to another cannot be allowed to become a gainer by injustice, and inasmuch as society is injured by injustice, if reparation cannot be made to the individual who has been wronged, it must be made to society, and this cannot be done better than by paying the debt to charitable purposes or to the poor. In general, debts must be paid as they become due, or at the time and in the manner agreed upon. If the debtor is unable to meet his obligations at the proper time he will be made a bankrupt, his property will vest in the official receiver or trustee, and will be distributed among the creditors in proportion to their claims. Certain debts, however, have priority over others by law. In England the order among these is as follows: rates and taxes; the wages or salary of any clerk or servant not exceeding fifty pounds in respect of services rendered during four months prior to the receiving order; wages of any labourer or workman not exceeding twenty-five pounds for services, whether time- or piece-work, rendered during two months prior to the date of the receiving order. If the assets are sufficient for the purpose these debts must be paid in full before all others, otherwise they will abate equally among themselves. In the United States the National Bankruptcy Act of 1898, as amended in 1903, gives priority to certain debts in the following order: all taxes legally due and owing by the bankrupt to the United States, State, County, District, or Municipality; costs of preserving the estate subsequent to filing the petition; the filing fees; the costs of administration; wages due to workmen, clerks, or servants which have been earned within three months before the date of the commencement of proceedings, not exceeding three hundred dollars to each claimant; and finally debts owing to any person who by the laws of the States or of the United States is entitled to priority. Similarly, the debts of a person lately deceased must be paid by the executor or administrator in the order prescribed by law. According to English law funeral expenses and the expenses of probate or taking out administration come first. Then the debts of the deceased in the following order: Crown debts; debts having priority by statute; debts of record; debts by specialty and simple contract. Similarly also in the United States after costs of administration and funeral expenses the debts due to the general government come next. Then follow other debts similar to those mentioned above as having priority in English law, but the order is not identical in all the States.

In certain circumstances the obligation of paying a debt ceases. This will be the case when a creditor freely condones the debt, as of course he may do if he chooses. Moreover, physical or moral impossibility excuses the debtor from paying the debt as long as the impossibility lasts. If a man has no money and no means of getting any, he is excused on the ground of impossibility from paying his debts. Even if he could not pay without reducing himself and his family to beggary, it will be held morally impossible for him, as long as those conditions last, to satisfy his obligations. Even justice must take account of other virtues and obligations. (How far a discharge in bankruptcy excuses from payment of debts in full out of subsequently acquired property is laid down in the article BANKRUPTCY.) The popes have sometimes for just cause used their authority as the supreme heads of Christian society to grant partial remissions or compositions for debts due to unknown creditors. One of the clauses of the Bulla Cruciayœ granted to the Spanish dominions confers such a privilege on the recipient on certain conditions. When a debt is barred by lapse of time, the civil authority refuses its help to enable the creditor to recover what is due to him, but the debtor is not freed in conscience ; he is still under a moral obligation to pay his debt. Finally, it may be mentioned that by ecclesiastical law those who have incurred heavy debts which they are unable to pay are prohibited from entering a religious order, at least if they have been reduced to that state through grave fault of their own.

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