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.
Types of Creditors
There are three types of creditors recognized by law, namely:
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Separed Creditors
Separed creditors are creditors who hold material collateral for their debts, such as liens, security interests, fiduciaries, warehouse receipts, and mortgages. An example of a separated creditor is a bank that provides credit secured by the debtor's building assets.
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Preferred Creditors
Preferred creditors are creditors who have special rights or privileges, allowing them to have their receivables paid first because they have a preemptive right based on the nature of their receivables. An example is the government as a tax collector. The privileges of preferred creditors are regulated in Article 1134 of the Civil Code.
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Concurrent Creditors
Concurrent creditors are general creditors who do not hold collateral or special rights, but have the right to collect debts from their debtors. In the debt repayment hierarchy, concurrent creditors are at the bottom of the hierarchy.
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.
Debtor Types
Here are several types of debtors.
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Negligence Type
Negligence refers to a company that delays payments due to negligence, often unintentional, due to poor internal management. This type of debtor can recover with proper credit management.
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Deferred Type
Deferred debtors attempt to delay payments. The difference between deferred and negligence lies in the intentionality of the act. In the negligence type, the debtor does not intentionally delay due to poor management, but in the deferred type, the debtor intentionally attempts to delay payments.
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Negotiation Type
Negotiation-type debtors pay their debts after obtaining favorable terms, such as discounts, payment extensions, and installment payments, even when the company is delayed. In this case, the debtor's inability to complete the contract is addressed with a penalty.
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Responsibility Transfer Type
This type of debtor typically transfers unpaid responsibilities to creditors, usually due to unfulfilled product claims.
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Forced Type
This type of debtor refuses to pay unless forced by the creditor. This force may take the form of a lawsuit or perhaps a loss, forcing the debtor to pay their debt to the creditor.
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Sudden Aggressive Type
This type of debtor has no desire to pay and is unable to cope, so they tend to give up due to the increasing delays and poor financial management.
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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