Creditors are agents in the financial market who has some sort of claim on another party. This second party is the borrower and is usually enforced by some contract to repay the creditor in the future. For example, collateral is often used as a form of enforcement, and insurance for the creditor. In some cases the borrower may not be shirking from repayment, but may actually be in a position where he is financially not capable of repaying the creditor. In this case, the borrower is termed insolvent and is likely to declare bankruptcy.
In Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act. Whenever a person cannot pay his or her debts owing and his or her debts owing are greater than $1,000, then they are eligible for bankruptcy. Often times though, in lieu of official bankruptcy, the debtor can file a consumer proposal (consumer bankruptcy). This proposal is a negotiated settlement with the debtor's creditors whereby the debtor will agree to making alternative payments on an alternate schedule. Often times the payments here are much less than the original amount owing. But, the creditor, for the most part, will accept the offer because otherwise the debtor will file for bankruptcy and the creditor will most likely receive even less.