The debtor is someone who owes money to a person or business for an outstanding debt. A debtor can be an individual or company. By contrast, the creditor is the person or business to which the debtor owes money. For instance, suppose that you used a credit card to make a purchase. You, the debtor, must pay off the money you borrowed from the credit card company, the creditor.
“Debtor” is also the term used to describe someone who files for bankruptcy relief. When you fill out a bankruptcy petition (the official form that you must submit to the court to initiate a bankruptcy case), you must list your name in the first space marked “About Debtor 1.” A spouse who files with you will be listed in the space marked “About Debtor 2.” The filer (or filers) will be referred to as a debtor throughout the bankruptcy proceedings.
(If you’d like to see the term used in the official petition, you can visit the U.S. Court’s website and download the Voluntary Petition for Individuals Filing for Bankruptcy.)
Similarly, someone else who is responsible for a debt along with you is called a “codebtor.” For instance, suppose that you weren’t able to qualify for auto financing on your own. If your aunt cosigned your loan (signed a contract agreeing to pay for the car if you didn’t), your aunt would be the codebtor on the loan. As codebtors, you’d both be responsible for paying off the obligation.
(To learn more about the responsibilities of a cosigner, read Will Your Cosigner Be Liable for Debt if You File for Bankruptcy?)