The ultimate debtor is a company or an individual that owes money to a creditor. In the case of payroll, the ultimate debtor is the company or the employer, and the creditor is the employee. Debtors are individuals or businesses that owe money, often to banks or individuals.
Penalties for not paying debt
Individuals who fail to repay debts may face property repossession, lawsuits, and more. Debtors can repay their debt repayments according to the terms of their debt. If they fail to honor the terms, they can face fees, penalties, and see a drop in their credit scores. The creditor can also take the debtor to court over the matter, leading to liens or encumbrances.
Debtor vs. Creditor
Creditors are the ones who extend credit to debtors. Creditors, as with debtors, can be a person or entity, such as an organization that provides supplies or services. When a company offers supplies or services and agrees to accept payment at a later time, they’re a creditor.