A liability is a financial obligation owed by an individual or a company to another person.
Liability is often referred to as debt and can include money owed for goods or services, loans, unpaid bills, credit card debts, accounts payable, or taxes. Liabilities can also include long-term obligations such as mortgages or car loans. Depending on the type of debt, the debtor may be legally required to make regular payments to a lender until the debt is fully repaid. Failure to make regular payments can result in penalties or other consequences such as wage garnishment or legal action.