debtor

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noun debt·or \ ˈde-tər \
Updated on: 26 Jul 2017

Definition of debtor

1 :one guilty of neglect or violation of duty
2 :one who owes a debt

Examples of debtor in a Sentence

  1. The debtor agrees to pay the debt over a three-year period.

Recent Examples of debtor from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'debtor.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of debtor

13th century


Financial Definition of DEBTOR

debtor

What It Is

A debtor is a person or entity legally required to provide a payment, service or other benefit to another person or entity (the obligee). Debtors are often also called borrowers or obligors in contracts.

How It Works

Companies that issue bonds are perhaps the most well-known debtors. They must provide their bondholders with set interest and principal payments on specified dates and in some cases must be willing to convert that debt into equity at specified ratios or repay the debt early if certain events occur.

However, a debtor also might be required to perform particular tasks or even refrain from performing certain actions. When a debtor fails to meet its obligations, the debtor is sometimes considered in default.

Why It Matters

Debtors are subject to contractual obligations. As such, if they do not fulfill their obligations, the creditors usually have the right to seek recourse in court. A significant amount of reputational damage can also occur when an entity, especially a public company, fails to meet its obligations. In some cases, even the speculation that a debtor might not fulfill its obligations can cause its stock price to go down and make it very difficult to obtain financing or other help later.


DEBTOR Defined for English Language Learners

debtor

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noun

Definition of debtor for English Language Learners

  • : a person, organization, government, etc., that owes money


DEBTOR Defined for Kids

debtor

play
noun debt·or \ ˈde-tər \

Definition of debtor for Students

:a person who owes a debt

Law Dictionary

debtor

noun debt·or

legal Definition of debtor

:a person who owes a debt — see also bankrupt — compare creditor, obligee, obligor
Note: The Bankruptcy Act of 1978 calls the person concerned in a bankruptcy case the “debtor” as opposed to the “bankrupt.”


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