Definitions of Debt

Definitions of Debt

A

Ability to pay – appearing to have the means to a pay your debts either by savings, assets or income.

B

Bankruptcy – a legal petition to a court for debt problems.

C

Cancellation of student loans – a form of loan forgiveness for student loans.

D

Debt Help– education about debt solutions.

E

ECOA (Equal Credit Opportunity Act) – Federally mandated criteria to calculate credit score.

F

FCRA (Fair Debt Collection Practices Act) – protection provided to consumers from bill collectors who will use any information you give them against you to try to collect a debt and who may attempt to obtain such information by unscrupulous means.

G

Garnishment- Generally known as a ‘wage garnishment’. Garnishment is an action from a legal judgement awarded to a creditor. The garnishment is directly attached to your paycheck through your employer, before you receive your wage. Garnishment percentages vary from state to state but the usual amount is 20%  of your pay.

H

Hardship Letter- A letter written to creditors in which the debtor details the reasons for being behind or unable to pay creditor. Examples to include in a Hardship Letter: divorce, death of a loved one, job loss, family illness, foreclosure, underemployment, new student status, etc.

 I

 Insolvent- your debts exceed your ability to pay.

 L

 Lien-A binding claim against a debtor’s property.

 M

 Medical Debt- any debt incurred from receiving medical care.

 N

 Negotiated Debt Settlement- the art of creating new terms of repayment of a debt for less than originally owed amount.

O

Offers in Compromise- a deal with the IRS and some state tax to settle your tax debt for a lesser amount.

P

 Pay the minimum – the most expensive and long term approach to paying debts.

Q

Qualify for Debt Solution Programs- a way to determine if the debts are accepted into the program, an evaluation of the debtor’s financial distress i.e. Hardship Letter, and a match to the debtor’s financial goals.

S

Secured Debt- A debt backed by collateral. An example is an auto loan is secured by the car.

T

Tax Debt- a debt owed to the IRS. An example is unfiled income tax. The IRS can seize your property and your earnings without going through due process of law.

U

Unsecured Debt-Any debt not backed by collateral. A credit card is an example.

W

Ways and Means Test-Is a standard mathematical formula to determine whether you can file for Chapter 7 Bankruptcy – it varies from county to county.

This entry was posted on Thursday, June 17th, 2010 at 5:48 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Definitions of Debt”

1. Bankruptcy « www.debthelpandanswers.com says:

   June 29, 2010 at 8:37 pm

   [...] Debt Help | Maxed Out | About Us | Debt Seminars | Debt Settlement Questions | Dave Ramsey Said | Definitions of Debt | Site Map | Privacy [...]
2. ip camera says:

   December 5, 2010 at 2:16 am

   the information on this submit is really a single of the very best substance that I’ve actually appear throughout. I adore your submit, I will appear back again to examine for new posts.
3. jean lee says:

   February 5, 2012 at 10:05 pm

   medium haircuts…

   Its like you read my mind! You appear to know a lot about this, like you wrote the book in it or something. I think that you can do with some pics to drive the message home a little bit, but other than that, this is wonderful blog. An excellent read. I…