A principal debtor is a person who is primarily responsible for the repayment of a debt. They are the main borrower or debtor in a financial transaction. This debtor is typically the individual or entity that initially incurs the debt and has the primary obligation to repay it. They are legally bound to fulfill the terms and conditions of the debt agreement, including making timely payments to the creditor.
A co-debtor is a person or entity who assumes joint liability for a debt alongside the principal debtor. The co-debtor is responsible for repaying the debt if the principal defaults or is unable to fulfill their obligations. The co-debtor acts as a backup or additional source of repayment for the creditor in case the principal fails to meet their payment obligations.
In legal terms, the creditor can pursue both debtors for the repayment of the debt. The co-debtor’s liability is contingent upon the default of the principal debtor. If the principal fulfills their repayment obligations, the co-debtor typically has no obligation to repay the debt.
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