Acceleration Clause: Allows the lender in a loan agreement to demand early payment (sometimes in full) for certain reasons, such as defaulting on the loan, destruction of property, or transfer of title.

Additional principal payment: Additional money included with a loan payment to pay off the amount owed faster. This practice helps to reduce the amount of interest paid.

Adjusted balance: A method used by which some card issuers subtract all payments made during the month, then add the finance charges.

Amortization: A debt repayment process whereby borrowers make annual or monthly payments of interest and principal spread over a fixed number of years.

Annual percentage rate (APR): An annual rate of interest also referred to as the "finance rate" includes fees and total cost of credit paid to acquire the loan. The rate is calculated in a standard way by taking the average compound interest rate spread over the term of the loan. By law, lenders are supposed to disclose the APR in the credit agreement.

Annual fee: A bank charge for use of a credit card assessed each year, which is billed directly to the customer's monthly statement. Many credit cards come without an annual fee.

Arrears: The state of a payment that has not been made on time or accumulated unpaid debts.

Authorized user: Is a person to whom you give permission to use your credit card account.

Average daily balance: This is the method by which your credit card's due payments are calculated. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle.

Billing cycle: It is the number of days between the last statement date and the current statement date.

Billing statement: The monthly bill sent by a creditor to the customer is know as billing statement that gives a summary of activity on an account, including balance, purchases, payments, credits and finance charges. Important changes to a credit card account are often included in small-print fliers that are sent with the statement.

Bad credit: Is said when you have less than desired credit score while applying for credit. It is also referred to as a low credit score or a poor credit rating. However, there is no fixed scale. The factors which contribute to bad credit mainly include bankruptcy filings, county court judgments, default, late payments, and over-limit credit card usage.

Balloon payment: One large sum that covers the balance due and paid at the end of balloon mortgage by the borrower.

Bankruptcy: It is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. It can be declared voluntarily by the individual or organization.

Buydown: Lowering of the interest rate and/or monthly payments on debt due to a substantial additional payment while the debt is new. In other words, borrowers "buy" better rates.

Chapter 7 bankruptcy: Also referred to as "straight bankruptcy", this form of bankruptcy involves the liquidation of as much of the debtor's property as possible, while reserving him or her sufficient assets to start on a clean slate.

Chapter 13 bankruptcy: This type of bankruptcy is often referred to as "reorganization", and it involves a repayment plan that sets forth with specificity the manner in which debtors will settle their debts over three to five years. The minimum amount of payment required depends on the debtor's income and balance.

Charge-off: This debt is an uncollectible debt which a creditor eliminates on an account from the creditor's assets. It reflect on a credit report as a "bad debt" or "charge - off". When an account is charged off, the creditor will generally demand the balance in full or agree to a settlement paid within 30 days. Charge-off is generally reported to the credit bureaus as an I9 or R9. The number 9 is the code for a charged off account.

Collateral: Also known as security is defined as the assets that a consumer pledges to obtain a loan or other form of credit whereby the lender has the right to seize, upon the borrower's default.

Consumer bankruptcy: A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.

Co-signer: A person who signs a promissory note that is also signed by one or more other parties. All parties take responsibility for the debt if any of the others defaults.

Consumer Credit Counseling Service: A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time.

Consumer credit: Loans for personal or household use which are generally unsecured and not backed by collateral.

Consumer debts: Debts incurred from personal, as opposed to business, needs.

Conditionality: Additional requirements or responsibilities relative to a loan or debt other than simple repayment.

Credit: Money that a lender gives to a borrower on condition of repayment over a certain period.

Credit bureau: A company that collects and display information in the form of credit reports about how people handle credit, manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union.

Credit history: A record of a person's debt payments.

Credit insurance: A policy that pays off the card debt should the borrower lose his job, die or become disabled. The structure of protection for a revolving credit card debt is calculated each month to cover only the debt that existed at the last billing cycle.

Credit limit: The maximum amount of charges a cardholder may apply to the account. The Consumer Federation of America suggests people carry credit lines no greater than 20 percent of their gross household income.

Credit line: The maximum amount of money available in an open-end credit arrangement such as a credit card, or overdraft protection

Credit rating: Also known as a credit score, this number ranging from 300 to 900 is assigned by credit bureaus on the basis of a consumer's creditworthiness- calculated by examining the latter's payment history, present financial condition, and risk profile (i.e. bankruptcy, foreclosure).

Credit Score: Same as Credit Rating

Credit report: A report that contains information about an individual borrowing habits and money-managing skills. Lenders use it to determine whether to approve a loan and to set the terms. A person with a good credit report is likely to get a better interest rate than someone with a poor credit report.

Credit scoring system: A numerical system designed to measure the likelihood that a borrower will repay a debt created by assigning scores to various characteristics connected to creditworthiness.

Creditor: One who lend money.

Credit check: This process involves a review of a borrower's credit history by a lender prior to the extension of credit. Basically, a credit check helps lenders determine an applicant's creditworthiness and ability as well as willingness to repay debts. Credit checks reveal a borrower's payment history (i.e. non-sufficient funds checks, late payments) and other information alerting the creditor of the level of risk that the former poses.

Credit repair: Borrowers undertake this process by 1) ensuring that information in their credit reports is accurate, 2) disputing erroneous items with the credit reporting agencies, and 3) developing a spending plan to lower their debt and raise their credit score

Discharge: A borrower is relieved of liability for repayment of debt. This usually is accomplished through filing bankruptcy.

Debt: Money one person or firm owes to another person or firm.

Debt-to-income ratio: The percentage of before-tax earnings that are spent to pay off loans for obligations such as auto loans, student loans and credit card balances. Lenders look at two ratios. The front-end ratio is the percentage of monthly before-tax earnings that are spent on house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower's other debts are factored in.

Debtor: Anyone who owes money but technically, a person who has filed a petition for relief under the bankruptcy laws.

Default: The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.

Delinquency: Failure to make monthly payments on a debt on time.

Enrolled agent (EA): This federally-licensed tax specialist prepares tax returns for individuals, corporations, partnerships, trusts, estates and other tax-reporting organizations. An Enrolled Agent is also authorized to advise and represent taxpayers before the Internal Revenue Service for appeals, collections, and audits.

Equity: This represents the owner's interest in the real property or the property's market value less the amount of any encumbrances (i.e. liens, loans) secured by the real estate.

Equal Credit Opportunity Act: A federal law that prohibits discrimination in credit transactions on the basis of race, color, religion, national origin, sex, marital status, age, source of income or the exercise of any right under the Consumer Credit Protection Act

Fair-Share: A voluntary contribution from creditor.

Fair Debt Collection Practices Act: A federal law that prohibits certain methods of debt collection, such as harassment.

Fair Credit Billing Act (FCBA): This federal legislation is applicable to revolving charge accounts such as retail store accounts, credit cards, and other forms of "open end" credit accounts. Credit card issuers are required to follow a specific procedure when addressing billing disputes on the part of credit card borrower.

Fair Credit Reporting Act (FRCA): This federal law aims at ensuring that the data contained in consumer reports is complete and accurate, and that it is kept confidential. . It requires credit bureaus to furnish copies of consumers' credit reports at their request. Borrowers are entitled to review their credit report and to have erroneous statements corrected.

Finance charge: This represents the total cost of taking out a loan or other form of credit which consist of all the fees (including balance transfer fees, late fees, service fees for transactions, and interest charges) that are applied on to the original loan amount. Finance charges for credit card can be calculated with the following formula: Average Daily Balance x Daily Periodic Rate x Number of Days in Billing Cycle.

Financial planner: This professional helps people develop a plan for realizing their financial objectives and provide an assessment in almost every financial area ranging from estate planning, retirement, and taxes to insurance, investments, and savings. A financial planner also assists borrowers in limiting expenditures, freeing up cash, lowering their taxes, and setting up personal budgets.

Foreclosure: This is the legal proceeding by which the property of an owner who has defaulted on his or her loan payment is sold to satisfy the debt.

Grace period: If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.

Graduated Payment: A type of loan repayment schedule wherein payments are small in the beginning and increases gradually over the time.

Gross income: This is all the money, goods and property you receive during the year before you reduce it by using adjustments, deductions or exemptions. People who use the barter system have to include the value of whatever they've received in exchanged for services as part of their gross income.

Hardship deferment: To be eligible for a hardship deferment, a debtor must show that the IRS levy is preventing him or her from meeting his daily essential needs. A hardship deferment will put an end to collectors' calls for a minimum duration of one year.

Installment payment plan: Taxpayers may, under certain circumstances, enter into an installment agreement with the IRS to pay off the balance through an installment payment plan. They must inform the IRS of the date they intend to submit their monthly payment and of the amount of their proposed monthly payment. An electronic payment plan is available for taxpayers with a balance due of $25,000 or less.

IRS levy: This constitutes seizure and sale of a taxpayer's property by the IRS to collect a debt owed to it. The IRS may claim monies by selling the delinquent taxpayer's assets, garnishing his or her wages, or seizing his or bank account.

Introductory (or intro) rate: Also known as a teaser rate. The low rate charged by a lender for an initial period to entice borrowers to accept the credit terms. After the introductory period is over, the rate charged increases to the indexed rate or the stated interest rate.

Late fee: A fee that is charged by creditor to the clients account when a payment does not post by the specified due date.

Liability: Legal responsibility or obligation to something. Consumers who are in debt are liable for repayment.

Loan-to-value ratio (LTV): This represents the relationship, expressed in terms of a percentage rate, between the loan amount and the purchase price of an asset offered as collateral. The LTV indicates the amount of equity that a borrower will have in a piece of real estate.

Maturity date: This is the date that the last loan payment is due in full.

Minimum payment: The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance.

Monthly periodic rate: The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12. See periodic rate.

Not currently collectible: The IRS may classify a taxpayer's status as "currently not collectible" if the taxpayer shows an inability to pay his or her tax debts. Upon determining that a taxpayer is currently not collectible, the IRS is obligated to cease collection efforts such as garnishments and levies.

National Foundation for Consumer Credit: A nonprofit organization that educates consumers about using credit wisely. The NFCC is the parent group for Consumer Credit Counseling Service.

Negative Amortization: The situation in which partial payments are made on in debt, but instead of lowering the debt gradually, it increases the debt gradually. This can occur if payments made do not cover the interest, which then is added to the balance over time.

Over-limit fee: A fee that is charged by creditor to the clients account for a balance that is exceeding the client credit limit.

Offer in compromise: Delinquent taxpayers may submit an offer in compromise by showing 1) uncertainty as to the tax's accuracy, 2) uncertainty as to their ability to pay the outstanding tax liability in its entirety, or 3) the injustice or significant economic hardship that payment of the tax would impose. The IRS will accept a proposed settlement if it seems unlikely that the tax debt can be collected in full and the offer in compromise is an equitable.

In order for the IRS to grant an Offer in Compromise, a tax debtor must establish one of the following grounds:
* Doubt as to the correctness of the tax;
* Doubt as to whether he or she will be able to pay the tax liability in full; or
* Payment of the tax would be unfair or impose a considerable economic hardship.

An Offer in Compromise will be accepted by the IRS when there is little chance that the outstanding debt can be collected in its entirety, and the proposed settlement is an equitable representation of the collection potential.

Past due fee: A fee that is charged by the creditor to the clients account when an account is past due.

Power of attorney: A document in which the signer authorizes someone to conduct business in his or her name. For instance, signing title documents and checks.

Point-of-Sale: The literal place and time at which a transaction or agreement takes place.

Principal: The amount of money borrowed or the other way the amount of money owed, excluding interest.

Proposal: A document sent to creditors proposing the repayment plan of their debt through out company.

Partial Payment Installment Agreement: This tax debt settlement arrangement enables taxpayers to have a portion of their tax liability forgiven upon satisfying the terms of an installment agreement. Because the tax debtor's monthly payments to the IRS are not a full pay-off of the debt, this type of settlement is referred to as a partial payment installment agreement.

Penalty abatement: Through this tax debt resolution method, a tax debtor challenges interest and penalties for a specific length of time. Taxpayers may request a penalty abatement on the basis of 1) an administrative waiver (i.e. bad advice from a tax practitioner), 2) reasonable cause (i.e. a death in the family), or 3) an IRS error.

Re-age: When an account status is updated to reflect current when the account is delinquent.

Rate: Percentage a borrower pays for the use of money, usually expressed as an annual percentage.

Revolving line of credit: An agreement that allows lending a specific amount to a borrower, while allowing that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.

Secured card: A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.

Secured loan: Borrowed money that is backed by collateral.

Tax debt attorney: This tax professional specializes in assisting debtors to resolve a wide range of IRS tax issues including the following: 1) back taxes, 2) payroll problems, 3) appeals, 4) IRS penalties, 5) un-filed tax returns, 6) wage garnishment, 7) liens and levies, and 8) unmanageable monthly payments. Tax debt attorneys provide audit representation, negotiate payment plans on behalf of their clients, and help borrowers settle their tax liability through an offer-in-compromise or for a fraction of the debt.

Tax debt settlement: A tax resolution method available through the federal government. Tax debtors may utilize one of numerous programs offered by the government, such as penalty abatement, an installment agreement, and an offer-in-compromise.

Tax deduction: This represents an amount that lowers a taxpayer's income and consequently the tax to be paid. Tax deductions, which are expenses that debtors may subtract from adjusted gross income, include charitable contributions, mortgage interest, and medical expenditures.

Tax lien: The IRS or a local taxing authority may file a claim against a defaulting tax debtor's property or assets for overdue or delinquent federal income or real estate taxes. Taxpayers may be subject to a tax lien if they fail to pay income, estate, county, and/or city taxes.

Truth in Lending Act (TILA): This federal law aims at protecting the public against unfair and erroneous credit card practices and credit billing. TILA requires creditors to disclose loan terms, such as interest rates, outstanding loan payments and their due dates, and the total loan amount.

Uniform Consumer Credit Code (UCCC): This law sets guidelines for credit transactions, limits wage garnishment, and protects consumers from predatory lenders. The UCCC requires lenders to disclose loan terms to borrowers and oversees some debt collectors. It establishes the maximum amount that borrowers may be charged for credit and makes it unlawful for lenders to discriminate on the basis of marital status or gender when extending credit.

Usury laws: These state laws establish a ceiling on the interest rate that lenders may impose on different types of loans, such as payday loans.

Unsecured debt: Debt that is not guaranteed by the pledge of any collateral. Most credit cards are unsecured debt, which is a main reason why their interest rate is higher than other forms of lending, such as mortgages, which employ property as collateral.

Unsecured loan: An advance of money that is not secured by collateral.

Third Party Administered (TPA) note: Borrowers who utilize the services of a debt consolidation company will find a Third Party Administered mark on their credit report for any debts the latter helped resolve. This mark shows prospective lenders that the applicant experienced financial hardship in the past but displayed a sense of responsibility by seeking to resolve it in a timely and efficient way.