Legal Definitions - certificate creditor

A certificate creditor is a type of creditor who is owed a debt by a municipal corporation and receives a certificate of indebtedness instead of payment because the municipality is unable to pay the debt.

• A city owes a construction company $100,000 for building a new park. However, the city is facing financial difficulties and cannot pay the debt. The construction company becomes a certificate creditor and receives a certificate of indebtedness instead of payment.
• A town owes a landscaping company $50,000 for maintaining its parks. The town is unable to pay the debt and issues a certificate of indebtedness to the landscaping company, making them a certificate creditor.

These examples illustrate how a certificate creditor is a creditor who is owed a debt by a municipal corporation and receives a certificate of indebtedness instead of payment because the municipality is unable to pay the debt.