Bankruptcy – Under federal law, an individual’s assets are turned over to pay for outstanding debts. This occurs when an individual owes more than they have the ability to pay.
Chapter 7 – Voluntary bankruptcy that requires the assets of the debtor to be liquidated and/or turned over to pay the creditor.
Chapter 13 – Voluntary bankruptcy that requires the debtor to formulate a plan to repay the creditor within three to five years.
Credit – Arrangement for deferred payments to be made on a loan given (usually from a store or bank).
Credit Counseling – Debt education given to consumers to help prevent them from getting into debts that can’t be repaid.
Credit Score – A numerical statistical analysis of an individual’s credit files that show the likeliness of the person repaying debts in a timely manner.
Debt – money owed to creditors and other companies that offer services or products for a monthly payment (cars, homes, phone, loans, credit cards, etc).
Debt Consolidation – The process of compiling multiple unsecured loans into one unsecured loan, usually given to an individual by a bank or debt consolidation company, and forms one monthly payment that is owed to the lender instead of multiple creditors.
Debt Consolidation Loan – Loan given to debtors by a bank or debt consolidation company to pay off creditors.
Debt Management – Services offered to help pay off debt (debt settlement, debt consolidation, financial planning, etc).
Debt Settlement – The process of negotiating with creditors to lower the balance owed; must be paid in one lump sum.
