Debt a Glossary of Terms

Bankruptcy - Having been legally declared financially insolvent. There are two types of bankruptcy - liquidation, in which your debts are cleared (discharged) and reorganization, in which you provide the court with a plan for how you intend to repay your debts.

Collateral - Property acceptable as security for a loan or other obligation.

Collection Agency - A company hired by a creditor to collect a debt that it is owed.

Contract - An agreement between two or more parties, usually written down and enforceable by law .

Cosigner - To endorse (another's signature), as a loan agreement, lease or credit application. If the primary debtor does not pay, the cosigner is fully responsible for the loan or debt.

Credit Bureau - An organization to which business firms apply for credit information on prospective customers.

Credit Report -An account of your credit history, prepared by a credit bureau. A credit report will contain credit history, such as what you owe to whom and whether you make the payments on time, as well as personal history, such as your former addresses, employment record and any lawsuits in which you have been involved.

Creditor - A person or entity (such as a bank) to whom a debt is owed.

Debtor - A person or entity (such as a bank) who owes money.

Debt to Income Ratio - Most mortgage lenders use this ratio to analyze your financial well-being. It is figured by using your monthly debt divided by your monthly income. The lower the percentage the better your financial picture. This is often referred to as credit worthiness.

Default - To fail to pay money when it is due. A default on a mortgage or loan takes place when you fail to make the loan payments on time, fail to maintain adequate insurance or violate some other provision of your agreement with the mortgage / loan company.

Discharge (of debts) - A court's writing of off the debts of a person or business that has filed for bankruptcy.

Dischargeable Debts - Debts that can be erased by going through bankruptcy.

Down Payment - A cash payment made by a buyer when they purchase a property.

Equity - An increase in the value of your home or decrease in the loan amount on your home creates equity. Equity is the difference between what is owed on your home and the sale value. Most home equity lenders will allow you to borrow up to 80% of that value.

Fair Isaac and Company - Fair Isaac is the company responsible for creating the popular FICO score. This three digit score is created using information from your credit report and ranges from 300-850.

Foreclosure - The forced sale of property to pay off a loan on which the owner of the property has defaulted.

Garnishment - A court order directing a third party who holds money or property belonging to a defendant to withhold it and appear in court to answer inquiries.

Grace Period - A period of time during which you are not required to make payments on a debt.

Guarantor - A person who makes a legally binding promise to either pay another person's debt or perform another person's duty if that person defaults or fails to perform.

Interest - A commission you pay a bank or other creditor for lending you money or extending you credit. Usually calculated as a percentage of the mortgage or loan.

Lien - The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

Loan Consolidation - The combining of a number of loans into a single new loan. Usually done to gain more favourable terms e.g. lower cost repayments or longer time to pay.

Principal - A sum of money owed as a debt, upon which interest is calculated. If you purchased an item for $100 on your credit card that would be the principal balance.

Repossession - A creditor's taking of property that has been pledged as collateral for a loan.

Secured Debt - A debt on which a creditor has a lien. A car loan would be an example of secured debt.

Term - The time required to repay a loan.

Unsecured Debt - A debt that is not tied to any item of property. Credit card debt is an example of unsecured debt.

About the Author
1st Finance Guide features help and advice on debt consolidation amongst other general finance matters.

This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.

---

The Benefits of Debt Consolidation

It is quiet easy to get into financial difficulty having a home mortgage, a car truck or SUV loan and credit card repayments. There are now considerably... Read More

Debt Consolidation Mortgage - Decode Its Apparent Complexity

Someone great once said that 'if it isn't the sheriff, it is the finance company'. Do you feel the same? Has the piling up of bills forced... Read More

How To Get Rid Of Debt Problems Step 2 -- How To Prepare A Financial Statement

Here is how to prepare a financial statement, for the purpose of negotiating reduced payments with your creditors.Secured/Unsecured debts. Before we get into the substance of this,... Read More

Online Debt Consolidation ? Devising Newer Ways for Changing Consumer Trends

Consumers today are getting wiser by the day. They are educated and enlightened. They know what they want. A change in their needs and demands has led... Read More

Debt Consolidation: Why And How This Strategy Often Backfires!

Debt consolidation solutions, has found that as good as it sounds, debt consolidation loans rarely save you any money.In fact, they usually backfire and you wind up... Read More

Consolidate Your Credit Card Debt

With the popularity of plastic money in the present age, credit cards are gaining immense importance. With the growing increase in usage of such cards the credit... Read More

Debt Consolidation Benefits

If you've ever been in a situation where you needed money that you didn't have, you probably already know about loans and credit cards. Here is a... Read More

Debt Consolidation

Sometimes life can get on top of you and out of control. When this happens many of us indulge in a little retail therapy but when a... Read More

Tracking Down Cheap Debt Consolidation Loans

In the modern world of expensive living and high interest rates, it might seem nearly impossible to find cheap debt consolidation loans. If you're one of the... Read More

Burdened with Debt?

Too many debts? Having trouble paying your bills? Are you worried about losing your home or your car?You're not alone. Many people face a financial crisis some... Read More

Credit Counseling ? Get in Line Now to Avoid the Upcoming Rush

Credit counseling is a valuable service for consumers who have trouble managing their finances. A distinctly different service from debt consolidation, credit counseling assists consumers with problem... Read More

Debt a Glossary of Terms

Bankruptcy - Having been legally declared financially insolvent. There are two types of bankruptcy - liquidation, in which your debts are cleared (discharged) and reorganization, in which... Read More

Benefits of a Debt Consolidation Loan

There are many benefits in choosing a Debt Consolidation Loan, some of which are listed below:May be able to reduce your monthly payments.Can take off some of... Read More

Pay Off Debt Now: 5 Steps To Getting Your Finances in Order

In our world of dizzying change, nothing is more true than the time honored statement that circumstances always change.No where is this more true than with financial... Read More

Debt Consolidation Refinance Loans - A Great Way To Lower Your Bills

For millions of homeowners, refinancing is the perfect way to consolidate debts. You can consolidate your debts, eliminate outrageous interest rates and fees, and make one low... Read More

Debt Consolidation ? Options for Reducing Your Debt

Studies show that Americans are now saving less than ever before. Along with that, Americans are carrying a heavier debt load than ever. It's easy for a... Read More

Before Considering Debt Consolidation

If you believe in the good in people then you probably also believe that few people take out loans, or other forms of credit, with the intention... Read More

Individual Voluntary Arrangement IVA, an alternative to bankruptcy

Individual Voluntary Arrangement, IVA is an alternative to bankruptcy - which could provide you with a real solution to your debt problems.An Individual Voluntary Arrangement (IVA) is... Read More

Stafford Loan Consolidation

Stafford Loan ConsolidationA Stafford Loan, which can help to finance your way through a college or university, comes in two forms:Subsidized Stafford LoansA subsidized Stafford Loan, which... Read More

Debt Management - Debt Management Fees

Debt management fees can vary vastly from one company to another. Knowing what to look for and ask when seeking help through debt management will leave you... Read More

Credit Card Purgatory - A 7 Step Comprehensive Plan to Get and Stay out of Credit Card Hell

Does this Sound like You? There are 100 shopping Days left until Christmas and your Credit Card Balance is Higher now then it was in the beginning... Read More

Debt Consolidation - Just Lump It All Together!

In a world where people use credit as much as they drink water, it is no surprise that so many people need debt consolidation loans. Debt consolidation... Read More

Free Yourself Of Debt and Worry with Debt Consolidation

Debt consolidation programs can help you lift the burden of excessive debt and potentially save you hundreds of dollars a month. Debt consolidation professionals will work with... Read More

Debt Consolidation Company and Companies

Debt consolidation companies have dotted the debt solution landscape as a result of the critical financial conditions consumers find themselves in from heavy credit card debt and... Read More

Dangerous Debt Consolidation Loans

On the surface, debt consolidation loans offer cash-strapped consumers some relief from high interest rates. Looking deeper, consumers should be wary of both the pros and cons... Read More

Thinking Beyond Debt Consolidation Loans

Planning to devise a permanent solution to the problems of debt? The chances of success, to be exact, are lesser, given the features which characterize the debts.... Read More