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Simple English definitions for legal terms
certificate creditor
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A quick definition of certificate creditor:
A certificate creditor is someone who is owed money by a city or town, but instead of getting paid, they receive a certificate of indebtedness because the city or town doesn't have the money to pay them. It's like getting an IOU instead of actual money.A more thorough explanation:
A certificate creditor is a type of creditor who is owed a debt by a municipal corporation and receives a certificate of indebtedness instead of payment because the municipality is unable to pay the debt.
- A city owes a construction company $100,000 for building a new park. However, the city is facing financial difficulties and cannot pay the debt. The construction company becomes a certificate creditor and receives a certificate of indebtedness instead of payment.
- A town owes a landscaping company $50,000 for maintaining its parks. The town is unable to pay the debt and issues a certificate of indebtedness to the landscaping company, making them a certificate creditor.
These examples illustrate how a certificate creditor is a creditor who is owed a debt by a municipal corporation and receives a certificate of indebtedness instead of payment because the municipality is unable to pay the debt.