A business or individual to whom a debt is owed is a

• A. Debtor
• B. Creditor
• C. Lender
• D. Vendor

Answer: (B)

In a debt relationship, the key idea is who has the right to receive payment. The person who owes money is the debtor, and the person who is owed money is the creditor. So when a debt exists, the party entitled to be paid back is the creditor. For example, if you borrow money from a friend, your friend is the creditor because they are owed repayment. A lender is someone who provides funds and is often the creditor, but the precise term for the party owed the debt is creditor. A vendor is just a seller of goods or services and isn’t defined by who is owed money in a general debt sense.