A debtor is an individual or company that owes money to another party. If the debtor owes an obligation to a financial institution in the form of a loan, they are known as a borrower. If their debt is in the form of bonds or other types of securities, they are known as an issuer. Bankruptcy laws also consider a person who files a voluntary petition to declare bankruptcy as a debtor.
- Deferred Payment
A deffered payment is a postponed payment. An example of a deferred payment is a student loan, in which the total principal and finance charge balance is not due until after graduation. The borrower can repay the balance of a deferred payment in installments over a long period.
In the context of finance, the term delinquency refers to a debt that is owing or overdue. This occurs when an individual or business has failed to meet their contractual obligation to make debt repayments on time. Borrowers who act in a delinquent manner may face financial consequences. For example, late credit card payments can incur additional late fees, while mortgage payments that are not bought up to date can result in the lender initializing foreclosure proceedings.
- Derogatory Information
Derogatory information is negative information that a creditor receives indicating that a credit applicant has failed to pay their accounts with other creditors according to the required terms and conditions. The creditor can legally use this information to turn down a credit application. Derogatory information can refer to various items on an individual's credit report, including late payments, charged-off loans and bankruptcies. This type of information usually remains on an individual's credit report for seven years, with data on bankruptcies remaining for 10 years.
In financial terms, disclosures refer to creditors revealing facts about credit terms to borrowers. Federal and state laws require that creditors disclose certain information regarding the credit that they extend. Financial institutions are generally required to disclose terms on finance charges, minimum monthly payments, and their method of interest rate computation. They must also disclose their procedure for finding errors when billing disputes arise, as well as their reason for rejecting loan applications.