Creditor

AAA

DEFINITION of 'Creditor'

An entity (person or institution) that extends credit by giving another entity permission to borrow money if it is paid back at a later date. Creditors can be classified as either "personal" or "real." Those people who loan money to friends or family are personal creditors. Real creditors (i.e. a bank or finance company) have legal contracts with the borrower granting the lender the right to claim any of the debtor's real assets (e.g. real estate or car) if he or she fails to pay back the loan.

INVESTOPEDIA EXPLAINS 'Creditor'

When creditors are notified of bankruptcy proceedings, they have a couple of options with respect to their claim against the debtor:

1. They can share in any distribution from the bankruptcy estate according to the priority of their claim. Most unsecured, non-wage claims come low on the priority list.

2. They can take the debtor to court and challenge a debtor's discharge (the right not to pay back) due to bankruptcy protection.

RELATED TERMS
  1. Zero Prepayment Assumption

    The supposition that scheduled principal and interest will be ...
  2. Lender

    Someone who makes funds available to another with the expectation ...
  3. Creditors' Committee

    A group of people who represent a company's creditors in a bankruptcy ...
  4. Delinquency Rate

    The percentage of loans within a loan portfolio that have delinquent ...
  5. Guarantor

    A person who guarantees to pay for someone else's debt if he ...
  6. Loan

    The act of giving money, property or other material goods to ...
Related Articles
  1. Credit & Loans

    What are some signs that I need debt / credit counseling?

    Stop stressing about debt and bills and avoiding phone calls from debt collectors. Get help from a debt and credit counselor today.
  2. A credit rating is a useful tool not only for the investor, but also for the entities looking for investors.
    Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  3. Credit & Loans

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  4. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  5. Savings

    4 Ways To Weather An Economic Storm

    Keeping a cool head and sticking to a plan during an economic slump is vital to financial stability.
  6. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  7. Credit & Loans

    Help Your Kids Understand Money

    These simple tips will help you raise financially savvy kids.
  8. Entrepreneurship

    What are the differences between chapter 7 and chapter 11 bankruptcy?

    Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to ...
  9. Retirement

    Can a creditor seize my retirement savings?

    Whether a creditor can seize your retirement savings will depend on the type of account in which you are holding your retirement savings and the creditor that is seeking repayment.If your creditor ...
  10. Options & Futures

    What are the most common momentum oscillators used in options trading?

    Read about some of the most common technical momentum oscillators that options traders use, and learn why momentum is a critical concept for options trading.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center