What is a receivable, and what are the different types?

Quick Overview

A claim means that one person has the right to demand a specific performance from another person. Most often, this involves the payment of a debt, an invoice, a loan, or compensation for damages. The debtor, on the other hand, has an obligation—that is, a duty to perform.

Claims vary depending on whether they are monetary or non-monetary, due or not yet due, secured or unsecured. For creditors, the key factors are the due date and the statute of limitations. If a creditor does not assert the claim in a timely manner, they may no longer be able to successfully enforce it in court.

Do you need to find out if your claim is enforceable? Our attorneys will help you assess the contract, the due date, the statute of limitations, and the most appropriate enforcement strategy.

A claim is one of the fundamental concepts in the legal and business world. In this relationship, a creditor is a person who has the right to demand certain performance from a debtor, whether it be a sum of money or another form of obligation. In other words, it is the person to whom someone owes money. The debtor, on the other hand, is the person who has the obligation to fulfill this obligation—that is, the person who must pay. The debtor’s obligation to perform is referred to as a “debt,” while the creditor’s right to its fulfillment is called a “claim.”

What is a claim?

A claim is the legal right of one person (the creditor) to receive performance from another person (the debtor). This claim arises when the debtor fails to voluntarily fulfill their obligations and does not pay their debts, and the creditor has a legal right to enforce performance based on a contract or other legal relationship.

A claim can take various forms. Most often, however, it involves a sum of money that the debtor is required to pay. There are, however, other types of performance, such as the delivery of goods, the provision of services, and similar obligations.

We should also mention that a claim is not merely a matter of moral obligation but is a legally enforceable right. This means that if you owe someone money and have a written contract or similar agreement, that person, as the creditor, can take legal action to ensure that you fulfill your obligation—that is, what you promised to do under the contract. Otherwise, you may face legal action to recover the debt.

If you’re not sure whether you actually have an enforceable debt, it’s worth checking it before you start pressing the debtor for payment or filing a lawsuit. An attorney will review the contract, the due date, the evidence, and the risk of the statute of limitations expiring, and will recommend a course of action that makes both economic and legal sense.

Receivables and Liabilities – Two Sides of the Same Coin

A claim and an obligation relate to a single legal relationship. Each concept represents one side of the coin, so to speak. While the creditor has a claim and the right to demand its fulfillment, the debtor has an obligation and the duty to fulfill it. This relationship arises in virtually every business transaction.

To better understand this, imagine, for example, a situation where Pavel lends money to Hanka. Pavel, the creditor who lent the money, is entitled to its return—this is a claim. Conversely, Hanka is the debtor and has an obligation to repay this money to Pavel—that is her duty. A claim and an obligation are therefore interrelated legal categories.

In practice, we often see that while people know someone owes them money, they do not have their claim properly documented. There is no written contract, no receipt confirming the transfer of money, no clearly agreed-upon due date, or any communication that would make it clear exactly what was to be fulfilled. It is precisely these details that determine whether the claim can be collected quickly or whether the dispute will drag on unnecessarily.

On what basis can a claim arise?

A claim most often arises from some legal act. Among the most common cases in which a claim arises are the conclusion of a contract, a court decision, or the enactment of a law.

Contracts —specifically, these include, for example, a lease agreement, a sales contract, or a loan agreement. In each of these, one party has the right to demand performance from the other party. In a sales contract, payment must be made for goods or services; in a lease agreement, the agreed-upon amount must be paid for housing, and so on.

Court Rulings – A claim may also arise based on a court judgment ordering the debtor to pay a specific amount or fulfill another obligation. This often occurs in debt-related litigation, where the court rules in favor of the creditor and orders the debtor to pay, for example, damages or other claims.

Law – In some cases, claims arise directly from the law, such as the obligation to pay taxes or other statutory fees. A typical example is therefore claims by the tax authority against tax debtors.

Do you have a contract, invoice, court judgment, or acknowledgment of debt, and the debtor still isn’t paying? We’ll prepare a legal assessment of your claim and recommend whether a pre-litigation demand, a payment plan, a lawsuit, or a filing in insolvency proceedings is the most appropriate course of action.

Types of Claims, or How Claims Are Categorized

Claims can be classified according to several criteria, which is important for their management and collection.

Classification of Claims by Subject Matter

• Monetary claim – the debtor is obligated to pay a specific monetary amount to the creditor. This type of claim is the most common and well-known, as most commercial and contractual relationships are based on financial performance.
• Receivables for non-monetary performance—the debtor must provide performance other than money, such as delivering goods, performing construction work, or providing a specific service.

Classification of Claims by Due Date

• A due receivable is a receivable that is already past due, and the creditor has the right to collect it. For example, if an invoice is issued with a 30-day payment term and that term has already expired, the receivable becomes due.
• A receivable not yet due is one whose due date has not yet arrived. This may apply, for example, to a loan that is to be repaid over several years, but for which only a certain amount—or none at all—is currently due.

Classification of Receivables by Security

• Secured receivables are those backed by some form of guarantee, such as a lien on real estate, a third-party guarantee, or a bank guarantee. These receivables provide the creditor with greater assurance that they will be able to satisfy their claim even if the debtor fails to meet their obligations. In other words, the lender or provider has a sort of safety net in case the debtor fails to pay.
• Unsecured receivables are those that have no collateral. The creditor has no direct guarantee that the receivable will be repaid, which poses a higher risk. These receivables are typical in ordinary business relationships where no additional guarantees exist. In short, the seller can only hope that they will actually receive payment for their goods.

How to Enforce a Claim: What to Do When a Debtor Doesn’t Pay

If a creditor has a debt and the debtor fails to voluntarily fulfill their obligation, the creditor can choose from several ways to collect the debt. We cover debt collection in detail in a separate article, so here we’ll just outline the methods.

The simplest and most common method is to first seek payment through out-of-court means, provided both parties can reach an agreement. In most cases, a demand for payment is sufficient. If out-of-court collection fails, judicial enforcement follows.

From our legal practice: A client came to us to resolve an unpaid loan between acquaintances. She had sent the money via bank transfer but did not have a written contract, and the debtor claimed it was a gift. It was only a combination of bank statements, email correspondence, and subsequent payment demands that helped resolve the matter. When it comes to claims, it’s not enough to simply “know that someone owes me money”—you also need to be able to prove the debt.

If a debtor is unable to repay its debts, insolvency proceedings may be initiated. In these proceedings, creditors file their claims, and the order in which the claims will be satisfied is determined by law. Unfortunately, claims in insolvency proceedings are often not satisfied in full.

You Can No Longer Collect a Statute-Barred Debt

Every debt has a specific statute of limitations. If, as a creditor, you do not assert your claim within the period prescribed by law, the debt becomes time-barred. This means you can no longer demand payment, even through the courts. The debt itself does not disappear, and if the debtor wishes to do so, they may still pay it; however, you can no longer compel them to do so in any way. The general statute of limitations is three years; however, this period always depends on the specific legal relationship from which the debt arose.

It is not advisable to delay debt collection. The longer the creditor waits, the higher the risk that the claim will become time-barred, that the debtor’s financial situation will deteriorate, or that the debtor will file for insolvency. We can help you draft a demand for payment, calculate the interest and penalties on the debt, and determine the next legal steps.

Summary

A claim is the creditor’s right to demand a specific performance from the debtor, most commonly the payment of money. It may arise from a contract, a court decision, or directly from the law, and in practice, claims are distinguished, for example, by the subject matter of the performance, the due date, or the security provided. It is essential for a creditor to know when the claim became due, whether it is well-documented, and whether the statute of limitations is about to expire. If the debtor fails to pay, the process usually begins with an out-of-court demand, which may be followed by a lawsuit, a payment order, enforcement proceedings, or filing a claim in insolvency proceedings. The sooner a creditor addresses the situation, the greater the chance of preventing the statute of limitations from expiring, the loss of evidence, or the debtor transferring assets or filing for bankruptcy in the meantime.