Learn what debtors and creditors are, how they differ, and how they are shown in financial statements. Debtors are customers who owe money to a business, while creditors are suppliers or vendors who are owed money by a business. A debtor is someone who has borrowed money or received goods or services on credit and is obligated to repay the amount owed. Learn about the legal relationship, rights, obligations, and challenges of debtors in finance and accounting. 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. A debtor is defined as an individual or firm that owes a particular amount to a lender, payable at a future date or period. A creditor is the supplier of a loan or credit facility and usually makes money out of interest on the debt.
