Debtor & Creditor Defined
I owe a bunch of money. Am I the DEBTOR or the CREDITOR?
If you owe money, you are the DEBTOR. You have a debt to a person or a bank that you borrowed from in exchange for a promise to repay.
Each person or the bank that you owe money to is a CREDITOR. They have loaned you money (or provided goods or services) in exchange for your promise that you will pay them back at some agreed time in the future.
A SECURED CREDITOR is a creditor that has protected itself by attaching a legal notice to your property, such as a house or a car, so that if you do not pay them as agreed, they can seize the attached property and sell it to recover their money. Mortgage companies, car finance companies, and generally furniture and electronics stores that give credit to make purchases are secured creditors.
An UNSECURED CREDITOR is a creditor that loans you money without attaching legal notices to your property. The friend that loaned you $50, the gym where membership is overdue, and the bank where you have an overdraft or an ordinary credit card, are unsecured creditors.
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Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Debtor & Creditor Defined
