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A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person . The counterparty is called a creditor .
The convention of disclosure requires that all material facts must be disclosed in the financial statements.For example, in the case of sundry debtors, not only the total amount of sundry debtors should be disclosed, but also the amount of good and secured debtors, the amount of good but unsecured debtors and amount of doubtful debts should be stated.
Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor.Debt may be owed by a sovereign state or country, local government, company, or an individual.
A secured creditor has a 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. [2]
In finance, bad debt, occasionally called uncollectible accounts expense, is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going into liquidation or insolvency.
In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors. A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors.
A debtor has the right to request written validation of the debt; [33] A debtor may demand that the collector cease communication. [10] Section 809 of the Act directs that for disputed debts "the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt".