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Creditor & Debtor Video Lecture | Accountancy Class 11 - Commerce

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FAQs on Creditor & Debtor Video Lecture - Accountancy Class 11 - Commerce

1. What is the difference between a creditor and a debtor?
Ans. A creditor is a person or entity that lends money or extends credit to another person or entity, while a debtor is a person or entity that owes money to a creditor. In simple terms, a creditor is the one who is owed money, and a debtor is the one who owes money.
2. How does a creditor assess the creditworthiness of a debtor?
Ans. A creditor assesses the creditworthiness of a debtor by considering various factors such as the debtor's credit history, income, assets, liabilities, and the ability to repay the debt. They may review credit reports, income statements, bank statements, and other relevant documents to determine the risk involved in lending money to the debtor.
3. What are the rights of a creditor in case of non-payment by a debtor?
Ans. In case of non-payment by a debtor, a creditor has several rights to pursue the recovery of the debt. These rights may include taking legal action, hiring a collection agency, placing a lien on the debtor's property, garnishing wages, or seeking the assistance of a debt collection lawyer. The specific rights available to a creditor can vary depending on the jurisdiction and the terms of the credit agreement.
4. Can a debtor negotiate with a creditor to settle the debt for a lesser amount?
Ans. Yes, a debtor can negotiate with a creditor to settle the debt for a lesser amount. This is known as a debt settlement. Debt settlement often involves a debtor proposing to pay a lump sum or a reduced amount to the creditor as a final settlement of the debt. However, it is important to note that creditors are not obligated to accept such offers, and debt settlement may have implications on the debtor's credit score.
5. What are some common strategies for debtors to manage their debts effectively?
Ans. Debtors can employ various strategies to manage their debts effectively. Some common strategies include creating a budget to track income and expenses, prioritizing debt payments based on interest rates or outstanding balances, negotiating with creditors for lower interest rates or repayment plans, seeking credit counseling services, and considering debt consolidation or refinancing options. It is essential for debtors to communicate with their creditors, stay organized, and make consistent efforts to pay off debts.
82 videos|105 docs|42 tests

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