What is a creditor?

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A creditor is someone owed money under the Bankruptcy & Insolvency Act. Secured creditors, like those with a claim on your house or car, can repossess if you don’t pay. Unsecured creditors, including credit card companies, can only rely on available assets. Employees owed wages get priority among unsecured creditors. Reach out via phone, text, or live chat if you have any questions. Not all trustees can be trusted.

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What A Creditor Is Question

What is a creditor? DEBT INSIDERS I keep seeing the term “creditor” on my debt notices. I want to understand exactly what a creditor is and what role they play.

From: Anonymous Question
Location: White Rock, British Columbia (BC)
Category: debt management plan

What A Creditor Is Answer

A creditor is basically someone to whom money is owed. According to the Bankruptcy & Insolvency Act, this includes anyone with a legit claim to that money. Now, creditors come in two flavors: secured and unsecured. Secured creditors are the big dogs with claims to things like your house or car, and they can swoop in to take those back if payments aren’t made. Unsecured creditors don’t have that luxury and have to hope for the best from whatever assets you have available. Within the unsecured group, there are the VIPs like employees owed wages, who get a better spot in line, and then your everyday credit card companies who just have to wait their turn.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

A creditor is an individual or entity that has a claim against a debtor, typically through the provision of a loan or credit. Creditors may include banks, financial institutions, and other lenders. The role of a creditor is to seek repayment of the debt owed, which can be through various means depending on the legal and financial context. According to the Bankruptcy and Insolvency Act, creditors are classified as those who are owed money in the event of a debtor’s bankruptcy or insolvency.

From: OSB Helper

Related Questions to Creditor

Here are the top 5 most frequently asked questions related to the concept of a creditor in the context of debt and insolvency, based on common queries and trends:

1. What is the difference between a secured and an unsecured creditor?

• A secured creditor has a claim on specific assets as collateral, while an unsecured creditor does not have a direct claim on any assets[1][3][5].

2. How are tax debts treated in bankruptcy or a consumer proposal?

• Tax debts are treated as unsecured debts unless the government has registered a lien against your property before you filed[1][2].

3. What types of creditors are given priority in bankruptcy or a consumer proposal?

• Preferred creditors, such as those owed employee wages or court-ordered support, are given priority over other unsecured creditors[1][5].

4. Can student loans be discharged in bankruptcy or a consumer proposal?

• Student loans are usually unsecured but are subject to special rules before they can be discharged in bankruptcy, typically requiring a minimum period since the loan was issued[1][2].

5. How do debts with co-signers affect bankruptcy or a consumer proposal?

• Debts with co-signers remain the responsibility of the co-signer if the primary debtor files for bankruptcy or makes a consumer proposal, as the co-signer is still liable for the debt[1][4].

If you have a question about debt see our debt questions or ask your own debt related question.

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