Debt Collection & Credit Lingo

To get the most out of reading my Free Tips and all the other material on this website it’s important that you become familiar with the following Collection and Credit Lingo. These are words and phrases used in the debt collection and credit reporting business and some other words and phrases you should become familiar with:

• Assets – Anything you possess that has value. Assets may also be referred to as property.
   

• Bankruptcy – An action taken by a individual or a business in federal court to obtain relief from indebtedness.
   

• Charge Off – When a creditor writes off your debt as uncollectible.
   

• Collateral – Property pledged to guarantee the payment of a debt.
   

• Company - Any entity other than an individual person, such as a business, a corporation, a partnership, an organization, or an association.
   

• Creditor – An individual or company to whom a debt is owed. “Creditor” may be used to refer to the original creditor or to a successor creditor (an entity that has purchased or otherwise acquired the debt). It is interchangeable with lender, seller, dealer, vendor, owner or supplier.
   

• Credit Report – A report regarding a consumer containing credit history, public record information, personal, employment and location information issued on request normally for a fee by a Credit Reporting Agency (a Credit Bureau) to any person or entity legally authorized to receive it.
   

• Credit Score – An automated evaluation of a person’s credit worthiness calculated based on a secret statistical formula. The information used to calculate the score is believed to be primarily the consumer’s credit history and some personal data.
   

• Debt - A specific sum of money alleged to be owed by a debtor to a creditor. A debt may also be referred to as an agreement to pay, an obligation, an account, a balance due, a file or a case.
   

• Debtor – Any entity (individual or company) alleged to owe a debt. A debtor may also be called a consumer, a borrower, a deadbeat, a customer or a bill-payer.
   

• Debt Collector – Any entity that regularly attempts to collect debts for others. Debt collectors are also referred to as bill collectors or collectors.
   

• Default – The failure to meet payment terms of a debt.
   

• Dun – Any communication to attempt to collect a debt.
   

• Dunning - the act of contacting debtors to collect debts. This may include letters, notices, faxes, telephone calls and emails.
   

• Equity – The value of property after deducting mortgages, liens and any other encumbrances.
   

• Exemptions – Certain property designated by law as being exempt from seizure by creditors (varies in each state).
   

• FCRA – The Fair Credit Reporting Act, a federal law enacted to protect consumers from credit reporting abuse.
   

• FDCPA – The Fair Debt Collection Practices Act, a federal law enacted to protect consumers from debt collector abuse.
   

• Foreclosure – An action whereby property used to secure a debt is taken by the creditor.
   

• Garnishment – A process by which a portion of a debtor’s wages is taken to pay a debt.
   

• Insolvency – A condition that exists when income is not enough to cover debt payments and living expenses.
   

• Judgment – A decision of a court.
   

• Judgment Proof – A condition that exists when a person or a business has no assets or income that are at risk to be seized through a judgment levy.
   

• Levy – A court ordered or an IRS seizure of property.
   

• Lien – A binding claim against a debtor’s property.
   

• Money - The measure of a debt as well as the legal exchange that will generally be accepted to pay a debt. It may also be referred to as assets, funds, or property.
   

• Open Account - Another way of referring to an unsecured debt.
   

• Personal Property – Any property that’s not real property.
   

• Public Record – Information available to the public.
   

• Real Property – Land and buildings and most things attached to them - also called real estate.
   

• Remedy – A creditor’s means to enforce collection of a debt.
   

• Repossession – When a creditor takes back property because a debt is in default.
   

• Skip – A person who runs away from their debts.
   

• Skiptracing – The investigative procedure used by debt collectors to locate skips.
   

• Sue or File Suit – An action in court to collect a debt.
   

• Statutes of Limitation – Laws that set time limits for filing an action in court to collect a debt.

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