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{{Short description|A legal entity that owes debt to another entity}} |
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{{unreferenced|date=February 2007}} |
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{{redirect|Borrower||The Borrowers (disambiguation)}} |
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{{More citations needed|date=November 2014}} |
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A '''debtor''' or '''debitor''' is a [[legal entity|legal entity (legal person)]] that owes a [[debt]] to another entity. The entity may be an individual, a firm, a government, a company or other [[legal person]]. The [[counterparty]] is called a [[creditor]]. When the counterpart of this debt arrangement is a [[bank]], the debtor is more often referred to as a '''borrower'''. |
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'''Debtor''' |
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If X borrowed money from their bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor. |
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1. Respectively, a person who owes a debt and a person to whom the debt is owed. |
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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 one fails to pay a debt, they have broken a contract or agreement between them 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.<ref name="Debtor">{{cite web|url=http://www.investopedia.com/terms/d/debtor.asp|title=Debtor|publisher=Investopedia|access-date=2014-08-23}}</ref> |
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Usually the debtor has received something from the creditor, in return for which the debtor has promised to make repayment at a later time. If the debtor fails to repay by the deadline, a formal collection process may commence. It is sometimes possible to attach the debtor's property, wages, or bank account as a means of forcing payment. Imprisonment of the debtor is a practice no longer followed. See also [[garnishment]], [[lien]]. Source: http://www.britannica.com/ebc/article-9362386 |
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For the most part, debts that are business-related must be made in writing to be enforceable by law. If the written agreement requires the debtor to pay a specific amount of money, then the creditor does not have to accept any lesser amount, and should be paid in full. |
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2. Is one of the account balances in [[financial statements]]. Usually it is presented as one of [[current assets]]. |
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Also, if there was no actual agreement but the creditor has proven to have loaned an amount of money, undertaken services or given the debtor a product, the debtor must then pay the creditor. |
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In writing [[ledger]] accounts, a debtor's amount is written on the [[debit]] (Dr) side, as the name suggests. Debtor as it appears in balance sheet connotes same meaning as the [[accounts receivable]] (USA accountancy). In other words, a Debtor is someone who owes you money. It is the opposite of a [[Creditor]] who is someone to whom you owe money. |
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==The history of the term “debtor”== |
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In [[economics]] a ''debtor'' (or a [[borrower]]) owes money to a [[creditor]]. |
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Anthropologist David Graeber suggests in ''[[Debt: The First 5000 Years]]'' that trading began with some form of credit namely the promise to pay later for already handed over goods. Because of this it can be said that debtors and creditors existed even before the implementation of coinage.<ref name="Debt: The First 5000 Years">{{cite web |url=http://www.unwelcomeguests.net/archive/audiobooks/Debt,%20The%20First%205000%20Years/David%20Graeber%20-%20Debt,%20The%20First%205000%20Years.pdf |title=Debt: The first 5000 years |publisher=Unwelcome Guests |access-date=2014-08-21 |url-status=dead |archive-url=https://web.archive.org/web/20140704024745/http://www.unwelcomeguests.net/archive/audiobooks/Debt%2C%20The%20First%205000%20Years/David%20Graeber%20-%20Debt%2C%20The%20First%205000%20Years.pdf |archive-date=2014-07-04 }}</ref> |
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The term debtor comes from the word ''debt'', which originated from the French word ''dette'', which came from the Latin word ''debere'', meaning to owe.<ref name="Debt: meaning">{{cite web|url=http://dictionary.reference.com/browse/debt|title=debt|publisher=Dictionary.com|access-date=2014-08-27}}</ref> |
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==Types of debtors== |
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{{finance-stub}} |
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According to numbers released on March 31, 2013 by the U.S. Federal Reserve Board, [[household debt]] has passed the $11 trillion mark in the United States. [[Student loan debt]] will also soon pass the trillion-dollar mark.<ref name="Budgeting and Debt – Types of Debt">{{cite web|url=http://www.investopedia.com/walkthrough/financial-advisor-client-guide/budgeting-and-dealing-debt/budgeting-and-debt/types-debt/ |title=Budgeting and Debt – Types of Debt |publisher=Investopedia |access-date=2014-08-24 |url-status=dead |archive-url=https://web.archive.org/web/20140813162528/http://www.investopedia.com/walkthrough/financial-advisor-client-guide/budgeting-and-dealing-debt/budgeting-and-debt/types-debt/ |archive-date=2014-08-13 }}</ref> |
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[[Category:Generally Accepted Accounting Principles]] |
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There are many different types of debts, that can cause the debtor and creditor relationship to arise. Some of these areas include: |
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[[da:Debitor]] |
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*Bank account debt |
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[[de:Schuldner]] |
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*Trade debtors (Most commonly used in Accounting terms) |
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[[es:Deudor]] |
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*Car loan debt |
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[[et:Võlgnik]] |
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*[[Credit card debt]] |
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[[fr:Débiteur]] |
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*Council tax debt |
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[[ko:채무자]] |
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*Gambling debt |
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[[lt:Debitorius]] |
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*Legal court debt |
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[[hu:Adós]] |
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*Loan shark debt |
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[[nl:Debiteur]] |
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*Overdraft debt |
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[[no:Debitor]] |
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*Parking fines |
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[[pl:Dłużnik]] |
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*Payday loan debt |
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[[pt:Devedor]] |
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*Personal loan debt |
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[[sv:Gäldenär]] |
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*Phone debt |
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*Utility bill debts |
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<ref name="Types of Debt">{{cite web|url=http://www.stepchange.org/Debtinformationandadvice/Typesofdebt.aspx|title=Types of Debt|publisher=Stepchange|access-date=2014-09-04}}</ref> |
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Being a debtor is not restricted to an individual, as in business there is also company debt. Many companies heavily invest in accountancy and rely on [[insolvency]] solutions to prevent debt from being left aside. |
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==Default== |
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{{main|Default (finance)}} |
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Default occurs when the debtor has not met its legal obligations according to the debt contract, e.g.- it has not made a scheduled payment, or has violated a [[loan covenant|covenant]] in the debt contract. Default may occur if the debtor is either unwilling or unable to pay its [[debt]]. This can occur with all debt obligations including [[Bond (finance)|bonds]], [[mortgage loan|mortgage]]s, [[loan]]s, and [[promissory note]]s.<ref name="Default">{{cite web|url=http://www.investopedia.com/terms/d/default2.asp|title=Default|publisher=Investopedia|access-date=2014-11-12}}</ref> |
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⚫ | If the debt owed becomes beyond the possibility of repayment, the debtor faces [[insolvency]] or [[bankruptcy]]; in the [[United Kingdom]] and some states of the [[United States]] until the mid-19th century, debtors could be imprisoned in [[debtor's prison]]s, while in some countries such as [[Greece]] debtors are still imprisoned. |
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==Debtor in Bankruptcy and Individual Voluntary Arrangements== |
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An [[Individual Voluntary Arrangement]] is a legally binding arrangement supervised by a licensed [[Insolvency Practitioner]], the purpose of which is to enable an individual, sole trader or Partner ("the Debtor") to reach a compromise with his creditors and avoid the consequences of bankruptcy. The compromise should offer a larger repayment towards the creditor's debt than could otherwise be expected were the Debtor to be made bankrupt. This is often facilitated by the Debtor making contributions to the arrangement from his income over a designated period or from a third party contribution or other sources that would not ordinarily be available to a Trustee in [[Bankruptcy]].<ref name="A guide to individual voluntary agreements">{{cite web|url=http://www.mw-w.com/a-guide-to-individual-voluntary-arrangements.html|title=A guide to individual voluntary agreements|publisher=McTear Williams & Wood|access-date=2014-11-12}}</ref> |
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==Other uses== |
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In the Latin version of the [[Lord's Prayer]], the words ''Et dimitte nobis debita nostra/Sicut et nos dimittimus debitoribus nostris'', the words ''Debtor'' and ''Debt'' are sometimes translated as ''Sinner'' and ''Sin''. This particular understanding of sin, as a form of debt that humanity inherits, is related to the soteriological theory of [[substitutionary atonement]], which states that Jesus died on the cross as a propitiation, or substitute, for sinners.<ref name="Debt">{{cite web|url=http://www.merriam-webster.com/dictionary/debt|title=Debt|publisher=Merriam-Webster|access-date=2014-11-12}}</ref> |
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==See also== |
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*[[Administration order]] |
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*[[Administrative receivership]] |
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*[[Bankruptcy]] |
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*[[Creditor's rights]] |
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*[[Debtors' prison]] |
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*[[Liquidation]] |
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*[[Simplified Individual Voluntary Arrangement]] |
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*[[Protected Trust Deed]] (only available in Scotland) |
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==References== |
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{{Reflist}} |
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==External links== |
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*[https://web.archive.org/web/20090429115235/http://www.insolvency.gov.uk/ Insolvency Service website] |
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*[http://www.insolvency-practitioners.org.uk/ Insolvency Practitioners Association website] |
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*[http://www.insolvencynews.com/ Insolvency News] |
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{{Authority control}} |
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⚫ |
Latest revision as of 18:34, 14 October 2023
A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower.
If X borrowed money from their bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor.
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 one fails to pay a debt, they have broken a contract or agreement between them 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.[1]
For the most part, debts that are business-related must be made in writing to be enforceable by law. If the written agreement requires the debtor to pay a specific amount of money, then the creditor does not have to accept any lesser amount, and should be paid in full.
Also, if there was no actual agreement but the creditor has proven to have loaned an amount of money, undertaken services or given the debtor a product, the debtor must then pay the creditor.
The history of the term “debtor”
Anthropologist David Graeber suggests in Debt: The First 5000 Years that trading began with some form of credit namely the promise to pay later for already handed over goods. Because of this it can be said that debtors and creditors existed even before the implementation of coinage.[2]
The term debtor comes from the word debt, which originated from the French word dette, which came from the Latin word debere, meaning to owe.[3]
Types of debtors
According to numbers released on March 31, 2013 by the U.S. Federal Reserve Board, household debt has passed the $11 trillion mark in the United States. Student loan debt will also soon pass the trillion-dollar mark.[4]
There are many different types of debts, that can cause the debtor and creditor relationship to arise. Some of these areas include:
- Bank account debt
- Trade debtors (Most commonly used in Accounting terms)
- Car loan debt
- Credit card debt
- Council tax debt
- Gambling debt
- Legal court debt
- Loan shark debt
- Overdraft debt
- Parking fines
- Payday loan debt
- Personal loan debt
- Phone debt
- Utility bill debts
Being a debtor is not restricted to an individual, as in business there is also company debt. Many companies heavily invest in accountancy and rely on insolvency solutions to prevent debt from being left aside.
Default
Default occurs when the debtor has not met its legal obligations according to the debt contract, e.g.- it has not made a scheduled payment, or has violated a covenant in the debt contract. Default may occur if the debtor is either unwilling or unable to pay its debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes.[6]
If the debt owed becomes beyond the possibility of repayment, the debtor faces insolvency or bankruptcy; in the United Kingdom and some states of the United States until the mid-19th century, debtors could be imprisoned in debtor's prisons, while in some countries such as Greece debtors are still imprisoned.
Debtor in Bankruptcy and Individual Voluntary Arrangements
An Individual Voluntary Arrangement is a legally binding arrangement supervised by a licensed Insolvency Practitioner, the purpose of which is to enable an individual, sole trader or Partner ("the Debtor") to reach a compromise with his creditors and avoid the consequences of bankruptcy. The compromise should offer a larger repayment towards the creditor's debt than could otherwise be expected were the Debtor to be made bankrupt. This is often facilitated by the Debtor making contributions to the arrangement from his income over a designated period or from a third party contribution or other sources that would not ordinarily be available to a Trustee in Bankruptcy.[7]
Other uses
In the Latin version of the Lord's Prayer, the words Et dimitte nobis debita nostra/Sicut et nos dimittimus debitoribus nostris, the words Debtor and Debt are sometimes translated as Sinner and Sin. This particular understanding of sin, as a form of debt that humanity inherits, is related to the soteriological theory of substitutionary atonement, which states that Jesus died on the cross as a propitiation, or substitute, for sinners.[8]
See also
- Administration order
- Administrative receivership
- Bankruptcy
- Creditor's rights
- Debtors' prison
- Liquidation
- Simplified Individual Voluntary Arrangement
- Protected Trust Deed (only available in Scotland)
References
- ^ "Debtor". Investopedia. Retrieved 2014-08-23.
- ^ "Debt: The first 5000 years" (PDF). Unwelcome Guests. Archived from the original (PDF) on 2014-07-04. Retrieved 2014-08-21.
- ^ "debt". Dictionary.com. Retrieved 2014-08-27.
- ^ "Budgeting and Debt – Types of Debt". Investopedia. Archived from the original on 2014-08-13. Retrieved 2014-08-24.
- ^ "Types of Debt". Stepchange. Retrieved 2014-09-04.
- ^ "Default". Investopedia. Retrieved 2014-11-12.
- ^ "A guide to individual voluntary agreements". McTear Williams & Wood. Retrieved 2014-11-12.
- ^ "Debt". Merriam-Webster. Retrieved 2014-11-12.