Debtor

Loading the player...

What is a 'Debtor'

A debtor is a company or individual who owes money. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower. If the debt is in the form of securities, such as bonds, the debtor is referred to as an issuer.

BREAKING DOWN 'Debtor'

It is not a crime to fail to pay a debt. Except in certain bankruptcy situations, debtors can choose to pay debts in any priority they choose. But if you've failed to pay a debt, you have broken a contract or agreement between you and a creditor. Generally, most oral and written agreements for the repayment of consumer debt - debts for personal, family or household purposes secured primarily by a person's residence - are enforceable.

However, most debts for business or commercial purposes must be in writing to be enforceable. If the agreement requires the debtor to pay a certain amount of money, then the creditor does not have to accept a lesser amount. Also, if there was no actual agreement but the creditor has loaned money, performed services or provided the debtor with a product, that debtor must pay the creditor.

RELATED TERMS
  1. Collection-Proof

    A debtor who doesn’t have any assets that a creditor can collect ...
  2. Reaffirmation

    An agreement made between a debtor and a creditor to repay some ...
  3. Debt Fatigue

    When a debtor stops making payments on his or her debts and starts ...
  4. Judgment Lien

    A court ruling that gives a creditor the right to take possession ...
  5. Bad Debt

    A debt that is not collectible and therefore worthless to the ...
  6. Debtor In Possession - DIP

    An individual or corporation that has filed for Chapter 11 bankruptcy ...
Related Articles
  1. Markets

    What's a Debtor?

    A debtor​ is an individual or company that owes money.
  2. Investing

    Understanding Bad Debt

    Bad debt is money a company or lender is owed, but is unable to collect.
  3. Investing

    What Does a Creditor Do?

    A creditor is a person or entity that loans money or provides goods or services to another entity with the expectation of being paid back in the future.
  4. Personal Finance

    Inside Secrets of the Debt Collection Business

    Understanding how the debt collection business works will give you a better chance of coming out ahead if you ever have to tangle with a collection agent.
  5. Investing

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  6. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  7. Investing

    Explaining Debt Service

    Debt service is a measure of a person or entity’s use of cash to pay interest and principal on debt obligations.
  8. Personal Finance

    7 Tips For The Do-It-Yourself Debt Manager

    Hired gun not in your budget? Learn to be your own credit counselor.
  9. Managing Wealth

    Explaining Debt

    Debt is any amount a borrower owes a lender.
  10. Investing

    What are Debt Instruments?

    A debt instrument is a documented financial obligation that enables the issuer to raise funds by borrowing money and repaying it in the future.
RELATED FAQS
  1. How do debt collection agencies make money?

    Find out how a collection agency makes money, what rules it is bound by, and when it can take a pay check or garnish a bank ... Read Answer >>
  2. Are debt collectors allowed to call me at work?

    Find out if and when it is all right for a debt collector to call a debtor at work and how the debtor can make it stop under ... Read Answer >>
  3. What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2 ...

    Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy ... Read Answer >>
  4. Can a creditor sue me for a delinquent account?

    Learn what happens when an account is delinquent and read about the regulations that protect consumers who have delinquent ... Read Answer >>
  5. Do creditors have the same rights in all 50 US states?

    Learn more about the rights of creditors to pursue their debts; how they may vary from state to state and how they are regulated ... Read Answer >>
  6. What are my rights under the Fair Debt Collection Practices Act (FDCPA)?

    Read about the rights and protections granted to you as a debtor under the Fair Debt Collections Practices Act, and learn ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center