What Is an Account Debtor?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 September 2019
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An account debtor is an individual, company, or other type of organization that currently has an outstanding balance on some type of credit account extended by a creditor. The debtor is responsible for settling the outstanding account balance in a manner that is in compliance with the terms and conditions governing the use of the credit account. As long as the account is kept in good standing with the issuer, the account debtor is considered to be current on the account, even if there is some balance remaining.

One of the key responsibilities of an account debtor is to manage the credit extended by a bank, credit card company, or other type of lender in a manner that complies with the provisions found in the agreement associated with the credit account. The exact terms and conditions will vary, based on the type of account involved. For example, if the account has to do with a mortgage, the debtor will agree to and consistently tender a fixed payment each month until the loan balance is satisfied in full. As long as the monthly installment payments are made on time, the account debtor is considered to be current and in good standing with the lender.


The same general idea holds true when the type of account involves the issuance of a credit card. In this scenario, the account debtor is obligated to tender the minimum payment required for each statement period associated with the account. The debtor, at his or her discretion, is always free to pay more than that minimum amount as a means of reducing the overall card balance and minimizing the amount of finance charges and fees that are assessed on that balance. As long as the minimum due is tendered and posted on time, the account is considered to be in good standing.

When the account involved requires full payment within a set period of time, the account debtor is obligated to pay that full amount within the time allotted or be subject to the assessment of late fees and other charges. For example, if a vendor approves a sale and allows the debtor to take possession of the purchase without tendering payment at that time, the purchase may be invoiced with 30-day payment terms. Once the debtor receives the invoice, it is his or her responsibility to remit the invoice along with full payment before the last day of the terms. Failure to do so will usually mean that the vendor will impose additional charges that must also be settled, with those charges continuing to accrue at regular intervals until the debt is settled in full.


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