Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

debtor and creditor

Read a random definition: confidential

A quick definition of debtor and creditor:

Debtor-creditor law is about what happens when someone owes money to someone else and can't pay it back. The person who owes the money is called the debtor, and the person who is owed the money is called the creditor. There are different types of creditors, like those who have a special right to get paid first, and those who don't. When someone owes money and can't pay it back, they might have to go through a process called bankruptcy. Creditors can try to get their money back by going to court or hiring someone to help them, but they have to follow certain rules so they don't do anything unfair or mean. Sometimes, if a creditor can't get their money back, they might take something that belongs to the debtor, like their car or their house, and sell it to get some of their money back. But if the debtor tries to hide their things so the creditor can't take them, that's not allowed.

A more thorough explanation:

Debtor-creditor law is about what happens when someone owes money to someone else and can't pay it back. The person who owes the money is called the debtor, and the person who is owed the money is called the creditor. This kind of law usually comes up when someone goes bankrupt.

There are three types of creditors:

  • Lien-creditors: These are creditors who have a legal right to take a piece of property if the debtor can't pay the debt. The property is sold, and the money is used to pay off the debt. For example, if someone takes out a loan to buy a car, the lender might have a lien on the car. If the borrower can't pay the loan, the lender can take the car and sell it to get their money back.
  • Priority creditors: These are creditors who have a legal right to be paid before other creditors. For example, if someone owes taxes to the government, the government has a priority right to be paid before other creditors.
  • Non-priority creditors: These are creditors who don't have a lien or a priority right. They are the last in line to be paid, and they might not get paid at all if there isn't enough money to go around.

If a debtor can't pay their debts, creditors can try to get their money back by going to court or hiring a debt collector. But there are rules about how they can do this. For example, they can't harass the debtor or take property that the debtor needs to live.

Here are some examples of how debtor-creditor law works:

  • Example 1: John borrows $10,000 from a bank to buy a car. The bank puts a lien on the car, which means that if John can't pay the loan, the bank can take the car and sell it to get their money back.
  • Example 2: Mary owes $5,000 in taxes to the government. The government has a priority right to be paid before other creditors. If Mary goes bankrupt, the government will be paid before any other creditors.
  • Example 3: Tom owes $1,000 to a credit card company. The credit card company hires a debt collector to try to get the money back. The debt collector can't harass Tom or take property that he needs to live.

These examples show how different types of creditors can try to get their money back if a debtor can't pay their debts. They also show that there are rules about how creditors can do this, to protect debtors from unfair treatment.

debtor | debtor in possession

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
haha suckers!!!!!!!!!!!!!!!!!
20:38
prolly have a lil family and hobbies what loosers
hahah losers like what? you travel? have a life? not me, i'm reading every line of a contract while my seniors go play golf and enjoy like hahaha suckers
20:40
yea inverse perspective, what is fun is not fun and what is not fun is fun
20:40
you get it.
i wanna be able to travel a ton too
my ex just posted a harry potter related joke i think i dodged a bullet
20:41
Im only going to law school to recruit members for the revolution
20:41
nice where u wanna go? yea bullet dodged fr
can we join even if we're not at ur school
20:44
yeah but youd be in a different chapter
20:44
are we revolting against people who do not use their signal whilst driving?
20:44
We’re revolting against the man, man
20:45
Power does not flow from the sleeve of a judges robe to paraphrase
fuck yeah i'm down
MrThickRopes
20:46
uhhh
MrThickRopes
20:46
Yeeeeaahh
MrThickRopes
20:46
PUT DA BEAT ON BRUH
20:48
Aight yall can join but I call dibs on being assassinated
MrThickRopes
20:49
Unc unc unc unc unc
MrThickRopes
20:49
Up in da club
MrThickRopes
20:49
Up in da club uns uns uns uns uns uns
the unction
20:55
just got a DUI while drinkin an NA beer in my car
20:55
someone help is some1 a hoya lowya here?!
MrThickRopes
21:03
Yoooo wtf
21:03
jk ropes but I do got ops fr
MrThickRopes
21:12
Me too bruh they praying on my downfall fr
21:19
bruh i got ppl tryna make my head a brain smoothie
21:19
serve me with some margarita mix and agave sweetener and summ
LSD+ is ad-free, with DMs, discounts, case briefs & more.