What is a debtor?
A debtor is someone who owes money. For example, if you borrow £5,000 from a bank, you’re the debtor and the bank is the creditor. A debtor can also be a company or even a country.
Where have you heard about debtors?
A typical everyday scenario in which you're a debtor is when you buy something using a credit card as you're technically borrowing money to pay for goods or services. You're also a debtor if you have a car loan or mortgage.
What you need to know about debtors.
Because debt is borrowed funds, it’s normal to pay interest on the debt. If you fail to make scheduled payments on your loan, you will default on your debt. If a loan was secured with collateral such as your home, the lender can take and sell the property to recoup its losses. If the loan was unsecured, the lender can take legal action. Either way, you'll have a black mark on your credit file.
When you buy bonds, the seller of the bonds is the debtor and you're the creditor as you're lending money to the issuer.