general creditor

General Creditor

One who is owed an uncollateralized debt. A general creditor has no lien or collateral on the debt except perhaps a claim on unpaid-for goods, depending on the nature of the goods. In the event of bankruptcy in the United States, a general creditor has no automatic right to any part of the debtor's property, and must file a proof of claim in bankruptcy court. In a no-asset Chapter 7 bankruptcy, most debts are discharged to the detriment of the general creditor. In an asset Chapter 7 case, unsecured property is liquidated and distributed to general and other creditors according to the bankruptcy court's ruling. See also: Secured creditor.

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general creditor

A lender with an uncollateralized loan, such as the owner of a debenture. In the event that a borrower goes bankrupt, its general creditors are likely to recover a smaller proportion of what is owed them than secured creditors will.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.