Editing Creditor

{{short description|Person or organization that has a claim on the services of another party}}
{{other uses|Creditors (disambiguation)|Lender (disambiguation)}}
{{More citations needed|date=April 2020}}
{{Insolvency}}
A '''creditor''' or '''lender''' is a [[Party (law)|party]] (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed.<ref>{{cite book |last1=O'Sullivan |first1=Arthur |author-link=Arthur O'Sullivan (economist) |last2=Sheffrin |first2=Steven M. |title=Economics: Principles in Action |publisher=[[Pearson Prentice Hall]] |location=Upper Saddle River, NJ |year=2003 |page=264 |isbn=0-13-063085-3}}</ref> The first party, in general, has provided some [[property]] or [[Service (economics)|service]] to the second party under the assumption (usually enforced by [[contract]]) that the second party will return an equivalent [[property]] and service. The second party is frequently called a [[debtor]] or [[borrower]]. The first party is called the creditor, which is the lender of property, service, or money.

Creditors can be broadly divided into two categories: [[Secured loan|secured]] and [[Unsecured guarantor loan|unsecured]].
*A secured creditor has a [[Security interest|security or charge]] over some or all of the debtor's assets, to provide reassurance (thus to ''secure'' him) of ultimate repayment of the debt owed to him. This could be by way of, for example, a mortgage, where the property represents the security.
*An unsecured creditor does not have a charge over the debtor's assets.<ref>{{cite web |title=Insolvency for creditors |url=http://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/ |publisher=Australian Securities and Investments Commission |access-date=March 22, 2022}}</ref>

The term creditor is frequently used in the financial world, especially in reference to short-term [[loan]]s, long-term [[Bond (finance)|bonds]], and [[mortgage loan]]s. In law, a person who has a money judgment entered in their favor by a court is called a ''judgment creditor''.

The term creditor derives from the notion of [[Credit (finance)|credit]]. Also, in modern America, credit refers to a [[Credit rating|rating]] which indicates the likelihood a borrower will pay back their [[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:

*[[Long-term liabilities]]
**'Long-term creditors'
*[[Current liabilities]]
**'Current creditors'

==Rights==
{{Rights |By claimant}}
'''Creditors' rights''' are the procedural provisions designed to protect the ability of creditors—persons who are owed money—to collect the money that they are owed. These provisions vary from one [[jurisdiction]] to another, and may include the ability of a creditor to put a [[lien]] on a debtor's property, to effect a seizure and [[forced sale]] of the debtor's property, to effect a [[garnishment]] of the debtor's wages, and to have certain purchases or gifts made by the debtor set aside as [[fraudulent conveyance]]s. The rights of a particular creditor usually depend in part on the reason for which the debt is owed, and the terms of any writing memorializing the debt.

===Priority of creditors===
Creditors' rights deal not only with the rights of creditors against the debtor, but also with the rights of creditors against one another. Where multiple creditors claim a right to levy against a particular piece of property, or against the debtor's accounts in general, the rules governing creditors' rights determine which creditor has the strongest right to any particular relief.<ref>{{cite book |last1=King |first1=Lawrence P. |last2=Cook |first2=Michael L. |title=Creditors' Rights, Debtors' Protection, and Bankruptcy |url=https://books.google.com/books?id=YByGoSSzFFUC&q=%22Creditors'+rights%22+-wikipedia |publisher=M. Bender |date=February 1, 1989 |access-date=February 1, 2019 |isbn=9780256148237 |via=Google Books}}</ref>

Generally, creditors can be divided between those who "[[Perfection (law)|perfected]]" their interest by establishing an appropriate [[public record]] of the debt and any property claimed as collateral for it, and those who have not. Creditors may also be classed according to whether they are "in possession" of the collateral, and by whether the debt was created as a [[purchase money security interest]]. A creditor may generally ask a court to set aside a fraudulent conveyance designed to move the debtor's property or funds out of their reach.

===Specialized legal practices===
Some [[lawyer]]s have a specialized practice area focused on the collection of such [[debt]]s.<ref>{{cite web |title=Legal Dictionary - Law.com |url=http://dictionary.law.com/Default.aspx?selected=398&bold=%7C%7C |website=Law.com Legal Dictionary |access-date=February 1, 2019}}</ref> Such attorneys are frequently referred to as collection attorneys or collection lawyers.

[[Lawyer|Attorneys]] who practice in the area of creditor's rights perform one or all of the following:

*File lawsuits and using other legal collection techniques to collect [[consumer]] debts (i.e., debts owed by individuals)
*File lawsuits and using other legal collection techniques to collect commercial debts (i.e. debts owed by businesses)
*Represent creditor's interests in a [[bankruptcy]] proceeding<ref>{{cite web |title=Creditors' Rights in Bankruptcy :: Justia |url=https://www.justia.com/bankruptcy/creditors-rights/ |website=www.justia.com |access-date=1 February 2019}}</ref>
*[[Foreclose]] on homes or commercial real estate if the purchaser defaults on payment
*Recover (or [[replevin]]) secured goods (e.g., automobiles) if the purchaser defaults on payment

==Creditors' powers during insolvency==
In the UK, once an [[Individual Voluntary Arrangement]] (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 appointed [[Insolvency Practitioner]]. The creditors will begin to deal with the Insolvency Practitioner and readily accept annual reports when submitted.

Under the [[Companies Act 2006]], a company's creditors may apply to the court for an order summoning a meeting of the creditors or some of the creditors who fall into a specific category, in order to consider a compromise or "[[arrangement]]" between the company and its creditors. If a majority representing 75% in value of the creditors or class of creditors present and voting either in person or by proxy at the meeting agree a compromise, the meeting may apply to the court for the compromise to be enforced. The same provision would apply to members ([[shareholder]]s) of a company seeking to make an arrangement with the company.<ref>UK Legislation, [https://www.legislation.gov.uk/ukpga/2006/46/part/26 Companies Act 2006, Part 26: Arrangements and Reconstructions: General], accessed 15 August 2020</ref> The [[Corporate Insolvency and Governance Act 2020]] makes similar provision where a compromise has been proposed between creditors or members and a company that "has encountered, or is likely to encounter, financial difficulties".<ref>UK Legislation, [https://www.legislation.gov.uk/ukpga/2020/12/schedule/9/enacted Corporate Insolvency and Governance Act 2020, Schedule 9: Arrangements and Reconstructions for Companies in Financial Difficulty], accessed 15 August 2020</ref>

== See also ==
*[[Accounts payable]]
*[[Accounts receivable]]
*[[Accruals]] and [[deferred income]]
*[[Bank loan]] and [[overdraft]]
*[[Bankruptcy law]]
*[[Bill of exchange]] payable
*[[Collection agency]]
*[[Contract law]]
*[[Contribution claim (legal)]]
*[[Creditor's rights]]
*[[Debenture]] [[loan]]s
*[[Debtor]]
*[[Dividend]]s
*[[Fair Debt Collection Practices Act]]
*[[Individual voluntary arrangement]]
*[[IOU (debt)|IOU]] (I Owe You)
*[[Payment]]s received on account

==References==
{{reflist}}

{{Authority control}}

[[Category:Credit]]
[[Category:Debt]]