Legal Definition of debtor
- A person who owes money, goods or services to another, the latter being referred to as the creditor.
Definition of debtor
- (RP) IPA: /ˈdɛt.ə/, SAMPA: /"dEt.@/
- (Aus) IPA: /ˈdet.ə/, SAMPA: /"det.@/
- (GenAm) IPA: /ˈdɛt.ɚ/, SAMPA: /"dEt.@`/
- Rhymes: -ɛtə(r)
debtor (plural debtors)
- (economics) A person or firm that owes money; one in debt; one who owes a debt
- (law): One who owes another anything, or is under obligation, arising from express agreement, implication of law, or principles of natural justice, to pay money or to fulfill some other obligation; in bankruptcy or similar proceedings, the person who is the subject of the proceeding.
A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterparts of this debt arrangement is a bank, the debtor is more often referred to as a borrower.
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 source that would not ordinarily be available to a Trustee in Bankruptcy.
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