This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Under the provisions of the bankrupt act, with reference to discharge,1 the debt in question, to be affected by a discharge in bankruptcy, must be: (1) a debt provable in bankruptcy; and (2) not within any of the statutory exceptions. It is, therefore, necessary to determine, first, what is a debt provable in bankruptcy, and then what debts fall within the statutory exceptions.
Section 63 of the bankrupt act of 1898 provides: "Debts WHICH Mat Be Proved. - (a) Debts of the bankrupt may be proved and allowed against his estate which are: (1) a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of a petition in an action to recover a provable debt; (4) founded upon an open account, or upon a contract express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interest accrued after the filing of the petition and up to the time of the entry of such judgments.
1 See Sec. 3133 et seq.
(b) Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against the estate."
In determining whether a debt is provable in bankruptcy it is, therefore, necessary to consider: (1) What is the nature of the debt? and (2) When did the debt come into existence?