Alternate name: Debtor
How an Obligor Works
You could find yourself acting as an obligor in either a commercial or personal setting. For instance, if you’ve ever taken out a loan, then you’ve acted as an obligor to your lender. You’re legally bound to make all principal and interest payments on the loan. If you miss payments or default on the loan, your lender can file a debt collection lawsuit in order to collect the money you owe. In this instance, the obligor is also sometimes referred to as the debtor. In a personal setting, this often plays out when a spouse either pays alimony or child support payments to another spouse. For instance, a working spouse can be required to make monthly alimony payments to a non-working spouse, or the court may order a non-custodial to pay child support to the custodial parent. The obligor will have to petition the court if they wish to change the payment obligation. Otherwise, the obligee can take them to court for non-payment. A good example of this takes place in family law when the court awards a custodial parent child support payments. That means the non-custodial parent is the “child support obligor” and is responsible for making child support payments to the custodial parent. If they fall behind or stop making payments altogether, the obligor could be found to be in contempt of court and could face fines or even jail time. In a corporate setting, an obligor refers not only to payment agreements but also to affirmative covenants. An affirmative covenant is a contract that requires the obligor to repay debt or meet certain terms, including specific performance benchmarks.
Obligor vs. Obligee
Two common legal terms you’ll hear associated with this term are obligor and obligee. Though the words are similar, the definitions are very different in a legal context.
