In normal speech, a debtor is a person who owes money to another. In the administration of justice, this is a bit more complicated. Nevertheless, a debtor is characterised by the fact that he has an obligation towards another person. This obligation is not necessarily mean money. It can be an object or property. It could also refer to the rendering of a service. The opposite of the debtor is the creditor. A debtor must fulfil his obligation towards a creditor.


Debtor - a daily role

The term debtor has negative connotations. But there is no reason for this to be the case. In everyday life, we all are regular debtors. An example: if you buy an apple from a greengrocer, you legally conclude a sales contract. The result is that the grocer owes the customer an apple, and the customer owes the grocer 20 cents. Only when both obligations have been met, the contractual obligation is dissolved.

The problem only starts if a debtor does not fulfil his contractually or legally binding obligation in time. He then infringes on the term, and his contract partner is in his right to insist that the debtor makes up for it. If the debtor still does not fulfil his obligation, the creditor has various means of asserting his right.


The debtor and case law

The relationship between debtor and creditor is a key issue of jurisdiction. This is reflected in the fact that the entire second book of the German Civil Code only deals with debt. There is more to it than monetary debt. Buying, exchanging, renting, leasing - almost every contract creates debt. For bilateral contracts, both parties are creditor and debtor simultaneously. In the legal sense, a debtor is a legal entity - a person, firm or organisation, that is - that is required to to fulfil their obligation towards another entity.

The legislation also defines other terms relating to a debtor. Thus, the German Civil Code distinguishes between Holschuld (debt to be collected by creditor), Bringschuld (debt to be delivered by debtor) and Schickschuld (debt with obligation to send/remit). For example, monetary debt is debt with obligation to send (Schickschuld). This means that the debtor bears the risk and cost of the payment.

Sometimes more than one debtor are involved in a contract. These are referred to as joint debtors. Each of the debtors is thus liable for the total claim. However, the creditor can only claim the due payment once. Thus, the creditor can approach each of the joint debtors and claim the entire sum due to him or divide his claim among all debtors.

A person is no longer a debtor once he settles with the creditor. Then the debt dissolves. If the customer has paid the grocer for the apple, he is no longer a debtor. What's more, he does not necessarily have to make the payment himself. Under normal circumstances, a third party, such as a spouse, relative, bank, or a debtor of the debtor may also pay the debt. This requires neither the consent of the creditor nor that of the debtor. There are other ways in which a debt is dissolved - by means of debt cancellation and withdrawal. In the case of debt cancellation, the creditor renounces his claim. In the event of withdrawal from a contract, the obligations that have already been met are restituted by both parties.


Other names for debtors

Depending on the context, a debtor may also be called something else. For example, in accounting, a debtor can be referred to as a debitor, meaning an account receivable for goods and services. In a credit institution, the debtor can be referred to as a borrower. In the context of an enforcement, the debtor is the person subject to enforcement.

It only becomes a problem for a debtor, if he does not fulfil his contractually or legally binding obligation in time. In the classic case of a purchase agreement, the company will first send a payment reminder or dunning letter. From certain date, the debtor is in default and must pay the collection costs. If the debt is still not being settled, it will come to court proceedings and enforcement. Anyone who has to make a sworn statement in court will be entered in the record of debtors.

Persons who have in fact accumulated more debt than they can repay are over-indebted. They may seek advice from a debt counselling service.