creditor

A creditor is an individual, organization, or institution that extends credit by lending money, providing goods, or offering services with the expectation of future repayment. The creditor holds a legal claim, called a debt, against the debtor, the party that receives the credit. Creditors may be classified by the nature of the credit they provide, such as secured creditors, who have collateral backing the debt, and unsecured creditors, who have no specific asset pledged. Another distinction is between preferential creditors, who are given priority in bankruptcy proceedings, and ordinary creditors, whose claims are satisfied after higher‑priority debts.

Under contract law, a creditor’s rights arise from the agreement governing the credit transaction. These rights typically include the ability to demand payment according to the stipulated terms, to collect interest, and to enforce remedies such as foreclosure, lien placement, or legal action when a debtor defaults. In many jurisdictions, creditors must follow procedural rules before seizing assets, and consumer protection statutes may limit excessive interest or fees.

In bankruptcy cases, creditors file proofs of claim to assert the amount owed. Secured creditors may recover the value of their collateral, while unsecured creditors often receive a proportionate distribution from the debtor’s remaining estate. Creditors also play a role in credit reporting; timely repayment improves a debtor’s credit score, whereas defaults may lead to negative entries that affect future borrowing ability.

Internationally, creditor–debtor relations are governed by a mix of national laws and, in cross‑border transactions, by conventions such as the UNIDROIT Principles or the Hague Convention on the Recognition of Foreign Judgments. The balance between protecting creditor interests and preventing undue hardship for debtors remains a central concern in both legislative and judicial contexts.