Legal Definitions - creditor

A creditor is an individual or entity to whom another party owes an obligation, most commonly a financial payment. This obligation typically arises from money lent, goods or services provided, or other agreements where payment is due. The party owing the obligation is known as the debtor.

Here are some examples to illustrate the concept of a creditor:

• Car Loan: Imagine Sarah takes out a loan from a bank to purchase a new car.

  In this situation, the bank is the creditor because Sarah owes the bank regular payments for the money it lent her to buy the car. Sarah, in turn, is the debtor.

• Office Supplies: A small marketing firm orders a large quantity of printer paper and ink cartridges from an office supply store, agreeing to pay the invoice within 30 days.

  Here, the office supply store is the creditor. It has provided goods to the marketing firm, and the firm now has an obligation to pay for those supplies by the agreed-upon deadline.

• Freelance Work: A freelance web developer completes a new website for a client, who then receives an invoice for the services rendered.

  The web developer is the creditor because the client owes them payment for the professional services that have already been delivered. The client is the debtor in this arrangement.