Difference Between Creditor and Debtor

The difference between creditor and debtor is that the first is the one who has a loan to recover, while the second has acquired a payment obligation. They are the two parts of a financing operation.

In other words, the creditor is the one who has the power to collect a debt from another agent called the debtor. This, taking into account a previously agreed payment date.

If the debtor defaults, the creditor may even request a real asset (such as a home or a car) as compensation from the debtor.

Likewise, the creditor could even resort to the Judiciary to seek the recovery of the financing granted. However, this requires making a series of administrative expenses and legal advice.

Difference between creditor and debtor

To distinguish the creditor and the debtor, let us see, for example, the case of a mortgage loan granted by a bank.

Thus, the creditor is the financial institution that has approved the financing.

On the other hand, the debtor is the person who has received the loan in order to acquire a home. This, being able to access a period of indebtedness even greater than twenty years.

It should be noted that in this case the property purchased by the debtor works as a guarantee for the operation. Therefore, in case of default, the creditor can take possession of the property to execute it (sell it) and recover the loan granted.

Legality of the debtor and creditor

It should be noted that on some occasions the financing is not backed by a physical contract. For example, when it comes to a loan between relatives or people who have a lot of trust between them.

In this situation, the debt is enforceable by the creditor, but legally does not exist. This means that, in case of default or delay, the lender could hardly resort to the Judiciary. If you choose to sue, you would need to present some evidence or testimony that the debtor's obligation actually exists, which is complicated.