What is the distinction between debtor and creditor?

Definition of Debtor

A debtor is a person or enterprise that owes money to another party. The party to whom the money is owed might be a supplier, bank, or other lender who is referred to as the creditor.

Definition of Creditor

A creditor is a person, bank, or other enterprise that has lent money or extended credit to another party. The party to whom the credit has been granted is the debtor.

Examples of a Debtor and a Creditor

Assume that a company borrows money from its bank. The company is the debtor and the bank is the creditor. If a manufacturer sells merchandise to a retailer with terms of net 30 days, the manufacturer is the creditor and retailer is the debtor.

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