Investor Glossary-creditorInvestor Glossary-creditorInvestor Glossary-creditorInvestor Glossary-creditorInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Creditor

The HTML to link to this page
 

A creditor is a person or entity that is owed money by another person or entity (i.e. debtor). For example, a bank or a company that gives out mortgage loans is a creditor. In this case, the creditor is loaning money in exchange for collecting interest payments on the principal. An investor that holds a bond is also considered a creditor. A creditor often looks at the credit rating or credit score of the debtor to determine how the terms of a contract or a loan should be structured (i.e. secured debt, collateral requirements provision, default provision, etc.) and priced (i.e. counterparty risk premium). By evaluating its counterparty risk and implementing mitigation measures, a creditor tries to maximize its return on investment while minimizing risk. In the event of default by the debtor, the creditor can pursue legal actions with the appropriate court to collect on the debt owed. When the debtor files bankruptcy, the creditor will receive a bankruptcy notification. At that point, if the creditor determines that the debtor could in fact repay, such creditor has the option to pursue a non-dischargeability action with the bankruptcy court. However, if the debtor's inability to repay cannot be challenged, then the amount the creditor will recover, as well as when the creditor will recover it, will be based on the outcome of the bankruptcy proceeding.



Rate this Creditor definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: deferred revenue, FTSE, labor relations, debt service coverage, EBITDA, ex-dividend date, covered put, diluted share, LIBOR, Key Rate Duration, stock split, retained earnings, implied volatility, irrevocable trust, per diem, ex-dividend, 401a, balance sheet, Zero Cost Collar, reverse mortgage, in escrow, real GDP, open position, risk management, required rate of return, class C shares, stock market close, liquidity ratio, 1035 exchange, margin rate, quality assurance, limit order, dividends payable, FICO score, average price per share, option premium, phantom income, 144a, cancelled check, 1031 exchange, deferred tax, current ratio, annual return, wholly-owned subsidiary, APR, VIX, inflation, minority interest, command economy


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use