What is a debtor?

Debtor Definition: A debtor refers to an individual or a company that owes money to a lender. Another term for debtor is borrower, which refers to the individual or party that takes out a loan from a bank or a financial institution.

If a debtor borrows money to purchase securities, they are also called issuers. If a person or company isn’t able to fulfill the requirements of paying the loan or debt in full, they may have the option of declaring bankruptcy. After bankruptcy is filed, the term debtor still applies, even if the full amount of the debt or loan isn’t paid off.

Another option for creditors seeking delinquent payment from debtors, is through court order, which may result in garnishment of wages or salary, or repossession of collateral for child support and other debt or skipped payments.

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