Creditor
Encyclopedia
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 loan
s, long term bonds
, and mortgage loan
s. 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
.
The financial statements
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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.
Party (law)
A party is a person or group of persons that compose a single entity which can be identified as one for the purposes of the law. Parties include: plaintiff , defendant , petitioner , respondent , cross-complainant A party is a person or group of persons that compose a single entity which can be...
(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
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
or service to the second party under the assumption (usually enforced by contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
) that the second party will return an equivalent property or service. The second party is frequently called a debtor
Debtor
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...
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 loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s, long term bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
, and mortgage loan
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
s. 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
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
. 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
Trustworthiness
Trustworthiness is a moral value considered to be a virtue. A trustworthy person is someone in whom you can place your trust and rest assured that the trust will not be betrayed. A person can prove their trustworthiness by fulfilling an assigned responsibility - and as an extension of that, not to...
.
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
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
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- Long-term liabilitiesLong-term liabilitiesLong-term liabilities are liabilities with a future benefit over one year, such as notes payable that mature longer than one year.In accounting, the long-term liabilities are shown on the right wing of the balance-sheet representing the sources of funds, which are generally bounded in form of...
- 'Long-term creditors'
- Current liabilities
- 'Current creditors'
Creditors Power During Insolvency
In the UK, once an IVAIndividual Voluntary Arrangement
In the UK, an Individual Voluntary Arrangement is a formal alternative for individuals wishing to avoid bankruptcy.The IVA was established by and is governed by Part VIII of the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency...
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
Insolvency practitioner
In the United Kingdom, only an authorised or licensed Insolvency Practitioner may be appointed in relation to formal insolvency procedures.Quite often IPs have an accountancy background...
. 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
- Accounts payableAccounts payableAccounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet , sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid...
- Accruals and deferred income
- Bank loan and OverdraftOverdraftAn overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
s - Bill of exchange payable
- Creditor's rightsCreditor's rightsCreditor's rights is a legal term used to describe the set of procedural provisions designed to protect the ability of creditors - persons who are owed money - to collect the money that they are owed...
- DebentureDebentureA debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...
loanLoanA loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s - Individual Voluntary ArrangementIndividual Voluntary ArrangementIn the UK, an Individual Voluntary Arrangement is a formal alternative for individuals wishing to avoid bankruptcy.The IVA was established by and is governed by Part VIII of the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency...
- Intra-group accounts owed
- IOUIOU (debt)An IOU is usually an informal document acknowledging debt. An IOU differs from a promissory note in that an IOU is not a negotiable instrument and does not specify repayment terms such as the time of repayment. IOUs usually specify the debtor, the amount owed, and sometimes the creditor...
(I Owe You) - PaymentPaymentA payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
s received on account - Proposed dividends
- TradeTradeTrade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
creditors