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A debtor is an individual or company that owes money.

A debtor can be a customer who buys goods at a store, a store that borrows money from a financial institution to build a plant, an individual who borrows money from a bank to buy a house, or even a government or company that issues bonds.

Note that a debtor has an obligation to repay a debt, a process which is dictated by written and oral agreements, although most business or commercial debts must be in writing to be enforceable. While defaulting on a loan might not be against the law, creditors usually have a right to retrieve their money through some means if the debtor breaks the agreement.

Companies that default on a loan take great risks. Their stock values can plummet, their reputations can be tarnished and their credit ratings can fall, making future loans difficult to obtain.

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