What are the different types of creditors?

In Texas, creditors are individuals or businesses that are owed money by someone (known as the debtor). Creditors have certain rights depending on the type of debt that is owed. There are different types of creditors, each with different rights and responsibilities. Secured creditors are those that have been given a lien on an asset of the debtor. This asset, such as a car or a house, serves to secure the debt and can be taken by the secured creditor if the debt is not paid. Unsecured creditors are those that have not been given a lien on an asset of the debtor. Unsecured creditors are less likely to receive repayment if the debtor goes bankrupt and will have less power in a legal proceeding. Priority creditors are those that are given priority over other creditors when the debtor’s assets are distributed in bankruptcy. These creditors have contracts that place them higher in the line of creditors when it comes to repayment. Examples include creditors of taxes, child support, and alimony. Finally, contingent creditors are those who are only owed money if certain conditions are met. These creditors are usually the last in line to receive payment and must wait until all other creditors have been paid before collecting on what is owed.

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What are the different types of creditors?

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