You may often hear the terms creditor and debtor in banking or financing. But do you know what creditors and debtors are? What is the difference between the two? See the discussion in this article to understand more about the difference between a creditor and a debtor.
What is a Creditor?
The creditor is a party with the right of credit either because of an agreement or law and can claim this right in court. Creditors can be individuals, organizations, companies, or even government agencies with one or more claims to a second party for property or services in the form of a contract or agreement. Simply put, the creditor is the party that gives the loan to the debtor.
What is a Debtor?
Debtors are parties who receive credit or loans and can be individuals or business entities that owe debts from financial institutions such as banks or other financial institutions because of certain agreements or laws.
Usually, the debtor provides collateral or guarantees to the creditor to obtain a loan. The reason is that if the debtor fails to pay by the specified deadline, the creditor can confiscate the collateral of the creditor's assets or assets that are used as collateral to pay off debt payments.
Differences between Creditors and Debtors
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Role
The first difference lies in their respective roles in the understanding of debtors and creditors. The creditor acts as the party providing financial assistance, while the debtor acts as the party receiving the financial assistance.
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Protective Regulations
In terms of protective regulations, creditors have special rights to take several actions, such as confiscation of assets or prosecution before the law, when the credit that the debtor should pay becomes the default. However, credit institutions cannot act arbitrarily in collecting their rights because they receive strict supervision from the Financial Services Authority (OJK).
A debtor is also protected by his rights and obligations in the Financial Services Authority Regulation (POJK) concerning Consumer Protection in the Financial Services Sector. One of them, the debtor has the right to obtain product and/or service information that is accurate, fair, clear, and not misleading. If some goods or assets are pledged as collateral in the process of borrowing credit, a debtor is also entitled to get the goods or assets back after the credit payment is paid off.
For those of you who want to apply for a loan or credit, Bank MAS also has a variety of loan products ranging from business capital loans, investment loans, and personal loans. You can visit the nearest Bank MAS branch office for complete loan product information and the application process.
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