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{{Short description|Legal entity that owes debt to another entity}}
{{Redirect|Borrower||Borrowers (disambiguation){{!}}Borrowers}}
{{More citations needed|date=November 2014}}

A '''debtor''' or '''debitor''' is a [[legal entity|legal entity (legal person)]] that owes a [[debt]] to another entity. The entity may be an individual, a firm, a government, a company or other [[legal person]]. The [[counterparty]] is called a [[creditor]]. When the counterpart of this debt arrangement is a [[bank]], the debtor is more often referred to as a '''borrower'''.

If X borrowed money from their bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor.

It is not a crime to fail to pay a debt. Except in certain bankruptcy situations, debtors can choose to pay debts in any priority they choose. But if one fails to pay a debt, they have broken a contract or agreement between them and a creditor. Generally, most oral and written agreements for the repayment of [[consumer debt]] – debts for personal, family or household purposes secured primarily by a person's residence – are enforceable.<ref name="Debtor">{{cite web|url=http://www.investopedia.com/terms/d/debtor.asp|title=Debtor|publisher=Investopedia|access-date=2014-08-23}}</ref>

For the most part, debts that are business-related must be made in writing to be enforceable by law. If the written agreement requires the debtor to pay a specific amount of money, then the creditor does not have to accept any lesser amount, and should be paid in full.

Also, if there was no actual agreement but the creditor has proven to have loaned an amount of money, undertaken services or given the debtor a product, the debtor must then pay the creditor.

==The history of the term “debtor”==

Anthropologist David Graeber suggests in ''[[Debt: The First 5000 Years]]'' that trading began with some form of credit namely the promise to pay later for already handed over goods. Because of this it can be said that debtors and creditors existed even before the implementation of coinage.<ref name="Debt: The First 5000 Years">{{cite web |url=http://www.unwelcomeguests.net/archive/audiobooks/Debt,%20The%20First%205000%20Years/David%20Graeber%20-%20Debt,%20The%20First%205000%20Years.pdf |title=Debt: The first 5000 years |publisher=Unwelcome Guests |access-date=2014-08-21 |url-status=dead |archive-url=https://web.archive.org/web/20140704024745/http://www.unwelcomeguests.net/archive/audiobooks/Debt%2C%20The%20First%205000%20Years/David%20Graeber%20-%20Debt%2C%20The%20First%205000%20Years.pdf |archive-date=2014-07-04 }}</ref>

The term debtor comes from the word ''debt'', which originated from the French word ''dette'', which came from the Latin word ''debere'', meaning to owe.<ref name="Debt: meaning">{{cite web|url=http://dictionary.reference.com/browse/debt|title=debt|publisher=Dictionary.com|access-date=2014-08-27}}</ref>

==Types of debtors==
According to numbers released on March 31, 2013 by the U.S. Federal Reserve Board, [[household debt]] has passed the $11 trillion mark in the United States. [[Student loan debt]] will also soon {{when|date=July 2024}} pass the trillion-dollar mark.<ref name="Budgeting and Debt – Types of Debt">{{cite web|url=http://www.investopedia.com/walkthrough/financial-advisor-client-guide/budgeting-and-dealing-debt/budgeting-and-debt/types-debt/ |title=Budgeting and Debt – Types of Debt |publisher=Investopedia |access-date=2014-08-24 |url-status=dead |archive-url=https://web.archive.org/web/20140813162528/http://www.investopedia.com/walkthrough/financial-advisor-client-guide/budgeting-and-dealing-debt/budgeting-and-debt/types-debt/ |archive-date=2014-08-13 }}</ref>

There are many different types of debts which can cause the debtor and creditor relationship to arise.<ref name="Types of Debt">{{cite web|url=http://www.stepchange.org/Debtinformationandadvice/Typesofdebt.aspx|title=Types of Debt|publisher=Stepchange|access-date=2014-09-04}}</ref> Some of these areas include:
*Bank account debt
*Trade debtors (most commonly used in [[accounting]] terms)
*Car loan debt
*[[Credit card debt]]
*Council tax debt
*[[Gambling]] debt
*Legal court debt
*[[Loan shark]] debt
*Overdraft debt
*Parking fines
*Payday loan debt
*Personal loan debt
*Phone debt
*Utility bill debts

Being a debtor is not restricted to an individual, as in business there is also company debt. Many companies heavily invest in accountancy and rely on [[insolvency]] solutions to prevent debt from being left aside.

==Legislation==
In the United Kingdom, the [[Administration of Justice Act 1970]] protects debtors from [[harassment]] intended to coerce payment of a debt.<ref>UK Legislation, [https://www.legislation.gov.uk/ukpga/1970/31/section/40 Administration of Justice Act 1970], section 40, accessed on 11 July 2024</ref>

==Default==
{{main|Default (finance)}}
Default occurs when the debtor has not met its legal obligations according to the debt contract, e.g.- it has not made a scheduled payment, or has violated a [[loan covenant|covenant]] in the debt contract. Default may occur if the debtor is either unwilling or unable to pay its [[debt]]. This can occur with all debt obligations including [[Bond (finance)|bonds]], [[mortgage loan|mortgage]]s, [[loan]]s, and [[promissory note]]s.<ref name="Default">{{cite web|url=http://www.investopedia.com/terms/d/default2.asp|title=Default|publisher=Investopedia|access-date=2014-11-12}}</ref>

If the debt owed becomes beyond the possibility of repayment, the debtor faces [[insolvency]] or [[bankruptcy]]; in the [[United Kingdom]] and some states of the [[United States]] until the mid-19th century, debtors could be imprisoned in [[debtor's prison]]s, while in some countries such as [[Greece]] debtors are still imprisoned.

==Debtor in Bankruptcy and Individual Voluntary Arrangements==
An [[Individual Voluntary Arrangement]] is a legally binding arrangement supervised by a licensed [[Insolvency Practitioner]], the purpose of which is to enable an individual, sole trader or Partner ("the Debtor") to reach a compromise with his creditors and avoid the consequences of bankruptcy. The compromise should offer a larger repayment towards the creditor's debt than could otherwise be expected were the Debtor to be made bankrupt. This is often facilitated by the Debtor making contributions to the arrangement from his income over a designated period or from a third party contribution or other sources that would not ordinarily be available to a Trustee in [[Bankruptcy]].<ref name="A guide to individual voluntary agreements">{{cite web|url=http://www.mw-w.com/a-guide-to-individual-voluntary-arrangements.html|title=A guide to individual voluntary agreements|publisher=McTear Williams & Wood|access-date=2014-11-12}}</ref>

==Other uses==
In the Latin version of the [[Lord's Prayer]], the words ''Et dimitte nobis debita nostra/Sicut et nos dimittimus debitoribus nostris'', the words ''Debtor'' and ''Debt'' are sometimes translated as ''Sinner'' and ''Sin''. This particular understanding of sin, as a form of debt that humanity inherits, is related to the soteriological theory of [[substitutionary atonement]], which states that Jesus died on the cross as a propitiation, or substitute, for sinners.<ref name="Debt">{{cite web|url=http://www.merriam-webster.com/dictionary/debt|title=Debt|publisher=Merriam-Webster|access-date=2014-11-12}}</ref>

==See also==
*[[Administration order]]
*[[Administrative receivership]]
*[[Bankruptcy]]
*[[Creditor's rights]]
*[[Debtors' prison]]
*[[Interest expense]]
*[[Liquidation]]
*[[Simplified Individual Voluntary Arrangement]]
*[[Protected Trust Deed]] (only available in Scotland)

==References==
{{Reflist}}

==External links==
*[https://web.archive.org/web/20090429115235/http://www.insolvency.gov.uk/ Insolvency Service website]
*[http://www.insolvency-practitioners.org.uk/ Insolvency Practitioners Association website]
*[http://www.insolvencynews.com/ Insolvency News]

{{Authority control}}

[[Category:Debt]]