Creditor and debtor

What is a creditor?

A creditor is a person or entity that has the right to demand the fulfillment of a debt to another person (debtor) for the provision of goods or services.

Two exists types of creditors:

• Secured creditors: who demand a guarantee to support the cost of the good.
• Unsecured creditors: those who lend the good without any type of guarantee.

What is a debtor?

A debtor is that person or entity that has the obligation to respond to a debt, since he has previously made a voluntary commitment to pay a cost for having received a service or good.

Payment of outstanding debt it must be paid before a creditor. In the event of breach of contract or payment, in the manner or time estimated, the creditor will have the right to sue the debtor.

Difference between debtor and creditor

Although the two concepts are related to each other, they represent different positions:

• The creditor andI know who provides the service or sell the product.
• The debtor is the one who pays to obtain the good or service.
• The creditor sets all payment terms and costs of the property during the transaction, while the debtor accepts and signs the agreement.

Examples of creditor and debtor

Here are some examples:

• Suppose a supplier supplies raw material to a company with a future payment. In this case, the supplier is the creditor and the company is the debtor.
• In the case of credit cards, the company that issues them are creditors and customers are debtors.
• When paying for basic services for the operation of a Commerce (electricity, gas, water, etc.), the supplier of these, be it the State or a private company, will be the creditor while the business will be the debtor.