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Simple English definitions for legal terms
debtor
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A quick definition of debtor:
A debtor is someone who owes money or has an obligation to someone else. For example, if a person borrows money from a bank, they become a debtor and have to pay back the loan plus interest. In some cases, a debtor may also put up property as collateral for a loan or purchase, which means the creditor has the right to take the property if the debtor doesn't pay off their obligations. In bankruptcy law, the debtor is the person who files for bankruptcy or against whom an involuntary bankruptcy petition is filed.
A more thorough explanation:
A debtor is a person or entity that owes a debt or obligation to someone else. This usually means they owe money to a creditor.
- When you take out a loan from a bank, you become a debtor and owe the bank the money you borrowed plus interest.
- If you buy a car on credit, you are the debtor and owe the car dealership the money for the car.
- In a secured transaction, the debtor is the person who puts up property as collateral for a loan or purchase. For example, if you take out a mortgage to buy a house, the house is the collateral and you are the debtor.
These examples illustrate how a debtor is someone who owes an obligation to someone else, usually in the form of money. In each case, the debtor has received something of value (a loan, a car, a house) and has agreed to pay for it over time.