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.

Is Debt Consolidation The Magic Bullet?
Corsavoo.com, France - 8 hours ago
There are several ways out of this dilemma and one such way is through debt consolidation offered by government sources as well as debt consolidation ...

McCain, Obama Need to Talk About the `D' Word
Bloomberg - 2 hours ago
On a personal level, you can get out of debt through consolidation, pay-downs and savings. Before any of that can happen it's essential to demand leadership ...

How To Get Non-Profit Credit Card Debt Consolidation Help
3x24 - Your Newspaper and News Magazine, Germany - Sep 2, 2008
Non-profit credit card debt consolidation services analyze your situation honestly, letting you know exactly what their debt elimination plan will cost you ...
Little Know Credit Card Debt Advice For College Students 3x24 - Your Newspaper and News Magazine
all 2 news articles

Credit Card Debt Consolidation Services: How They Operate
3x24 - Your Newspaper and News Magazine, Germany - Sep 2, 2008
The problem with using credit card debt consolidation services is that no one ever tells you how credit card debt consolidation services really work and ...

Debt Consolidation - How and When to Use it to Settle Debt
3x24 - Your Newspaper and News Magazine, Germany - Sep 2, 2008
Do not take on more debt until the debt you have is paid. Address what you can fix on your own and then look for help. Debt consolidation may be the answer ...

Who Will Benefit From A Non Profit Debt Consolidation Service?
Corsavoo.com, France - Aug 29, 2008
When you contact a non profit debt consolidation service, you will be seeking the advice of a Certified Credit Counselor. The counselor will help you design ...
Credit Card and Personal Debt Consolidation Loans -- the Real Answer? Corsavoo.com
Basic advice on destroying debt Corsavoo.com
all 3 news articles

The Realities About Bad Credit Debt Consolidation
Corsavoo.com, France - Aug 29, 2008
Debt Consolidation Companies: What Exactly Do They Do? Basically, what a bad credit consolidation company does is that it acts as your mediator. ...
Watch Out For The Pitfalls of Debt Consolidation Loans Corsavoo.com
all 2 news articles

Non Profit Debt Consolidation
3x24 - Your Newspaper and News Magazine, Germany - Aug 25, 2008
A common solution to debt issues is debt consolidation, and many of the organizations that have formed to help people consolidate their debts are non-profit ...
Car Financing For Anyone Dealing With Low Credit Scores 3x24 - Your Newspaper and News Magazine
Credit Card Debt: Having an Efficient Escape Plan 3x24 - Your Newspaper and News Magazine
Understanding How the New Bankruptcy Laws Work 3x24 - Your Newspaper and News Magazine
all 4 news articles

Best Syndication
Surrounded by debts, don't worry debt consolidation loans are here ...
Best Syndication, CA - Aug 26, 2008
For people like these, debt consolidation loans is the right medicine to recover from the above mentioned problem. Debt consolidation loans are the loans, ...
Debt and the Changing Face of the Credit Market Best Syndication
all 6 news articles

Why Should I Use A Non Profit Debt Consolidation Program?
Corsavoo.com, France - Aug 27, 2008
The idea of a non profit debt consolidation program should be to help the consumer become educated about how credit works and provide counseling to help ...

Wind Chimes and more...

Windchimes for great gifts!

Debt Consolidation Made Simple