A
creditor is a
party (e.g. person, organization, company, or government) that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some
property or
service to the second party under the assumption (usually enforced by
contract) that the second party will return an equivalent property or service. The second party is frequently called a
debtor or
borrower. The first party is the creditor, which is the lender of property, service or money.
The term creditor is frequently used in the financial world, especially in reference to short term
loans, long term
bonds, and
mortgages. In law, a person who has a money judgment entered in their favor by a court is called a judgement creditor.
The term creditor derives from the notion of
credit. In modern America, credit refers to a rating which indicates the likelihood a borrower will pay back his or her loan. In earlier times, credit also referred to reputation or
trustworthiness.
Accounting classification
In
accounting presentation, creditors are to be broken down into 'amounts falling due within one year' or 'amounts falling due after more than one year'...
The
financial statements presentation is this:
Creditors Power During Insolvency
Once an IVA has been applied for and is in place through the courts, creditors are prevented from making direct contact under the terms of the IVA. All ongoing correspondence of an
IVA must first go through the
Insolvency Practitioner. The Insolvency Practitioner will contact you. The creditors will begin to deal with the Insolvency Practitioner and readily accept annual reports when submitted.
See also
- Intra-group accounts owed
