DEFINITION of 'Debtor'

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.


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.

  1. Demand Letter

    A letter sent to a debtor requesting payment. A demand letter ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Issuer

    A legal entity that develops, registers and sells securities ...
  5. Debt Financing

    When a firm raises money for working capital or capital expenditures ...
  6. Writ Of Seizure And Sale

    An order issued by a court that allows the petitioner (usually ...
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