Who is referred to as a debtor?

A debtor is defined as a business or individual who owes a debt. This status arises when a person or entity borrows money or receives goods or services with the obligation to pay for them in the future. Debtors are critical in finance because they agree to certain terms of repayment, which could include interest rates and payment timelines.

Understanding this concept is essential in fields such as finance and mortuary science, where managing funds and debts can significantly impact operations and service quality. In contrast to debtors, creditors are those who lend money or extend credit, expecting repayment from the debtor. Similarly, organizations offering services aren't inherently debtors unless they have an obligation to pay for services or goods received, and individuals who lend money are not considered debtors, as they have a receivable rather than a payable obligation. This distinction highlights the specific role of a debtor in financial transactions.