Debtor/Creditor Law

Federal and state laws regulate debtor-creditor law. A debtor is a person who owes another entity (creditor) money. There are several types of creditors. The first are lien-creditors who have a lien upon a debtor’s property. An example of this type of creditor is the lender, or mortgagee, who holds the mortgage to one’s house. Another type of creditor is a priority interest creditor. This creditor will have priority over all other creditors when the debtor becomes insolvent and files bankruptcy. An example of a priority creditor is the Internal Revenue Service which demands that all federal debt must be paid first. The most frequent type of creditor is one that does not have lien or priority interest, such as a credit card company.