what is an obligor 
an obligor also known as a debtor is a person or entity who is legally or contractually obliged to provide a benefit or payment to another in a financial context the term obligor refers to a bond issuer who is contractually bound to make all principal repayments and interest payments on outstanding debt the recipient of the benefit or payment is known as the obligee understanding obligorsan obligor is a person who is legally bound to pay another person debt holders are the most common types of obligors however in addition to the required repayment of interest and principal many holders of corporate debt are also contractually required to meet other requirements for a bondholder these are called covenants and are outlined in the initial bond issue between the obligor and obligee 1covenants can be either affirmative or negative an affirmative covenant is something that the obligor is required to do such as the need to hit specific performance benchmarks a negative covenant is restrictive in that it stops the obligor from doing something such as restructuring the leadership of the organization 2since these bond issues are contractual obligations obligors may have very little leeway in terms of deferring principal repayments interest payments or circumventing covenants any delay in payment or non payment of interest could be interpreted as a default for the bond issuer an event that can have massive repercussions and long term ramifications for the continuing viability of the business as a result most bond obligors take their debt obligations very seriously defaults by overleveraged obligors do occur from time to time with bonds if a covenant is breached by an obligor the bond may become invalid and require immediate repayment or it can sometimes be converted to equity ownership 3since these bond issues are contractual obligations obligors may have very little leeway in terms of deferring principal repayments interest payments or circumventing covenants any delay in payment or non payment of interest could be interpreted as a default for the bond issuer an event that can have massive repercussions and long term ramifications for the continuing viability of the business as a result most bond obligors take their debt obligations very seriously defaults by overleveraged obligors do occur from time to time an obligor does not have to be a bondholder in family law there are certain cases when a court order is handed down in a divorce settlement for example that requires one of the parents to pay child support to the other parent if a working spouse is told by the courts to pay the non working spouse 500 a month the monthly payment will make them an obligor in situations like this if there are changes to an obligor s financial status or income they may petition the court to reduce their monthly obligation 1otherwise even if the obligor loses their job the payments remain due and cannot be discharged in bankruptcy like other civil judgments if an obligor falls behind on court ordered payments such as child support it can lead to problems such as wage garnishment loss of driver s licenses and other problems it is important that an obligor parent pay what is owed and make an effort to change child support amounts when there is a change in income of either parent 