A creditor is an individual or entity that is owed money. Examples of creditors are suppliers and lenders. There are several varieties of creditor, which include the following:
- Secured creditor. This creditor is legally entitled to take certain borrower property and sell it in the event of a payment default.
- Unsecured creditor. This creditor is not legally entitled to take any borrower property in the event of a default.
- Senior creditor. This creditor will be paid before junior creditors in the event of a borrower's bankruptcy.
- Junior creditor. This creditor will only be paid after senior creditors have been paid in full, if there is a borrower bankruptcy.