Credit Dictionary
Accounts Receivable: credit extended by any person or company to another
(normally unsecured) with usual repayment terms requiring a monthly payment
to amortize the balance owed.
Amortize: To liquidate or reduce an amount owed through a series of
payments.
ANI: See Automatic Number Identifier.
Attorney: A legal agent authorized to appear before a court of law as a
representative of a party to a legal controversy.
Automatic Number Identifier: The ability of a company to identify an 800-
number caller's name and address. Every time a consumer calls one of these
toll-free 800 numbers, there is a record of that call; the debt collection community
frequently uses this to locate a consumer's home or business location after they
have gone underground. (Use pay phones!)
Bad Debt Expense: An accounting category reserved for debts deemed
uncollectible.
Bankruptcy: A legal maneuver allowing consumers or businesses to
discharge all debts and liabilities. The actions of most debt collection agencies
force consumers into bankruptcy instead of settling outstanding accounts.
Blackmail: Any payment induced by or through modation, by use of threats
of injurious information or accusations. (A technique frequently used by unethical
debt collection agencies.)
Bulletproofing: Insulating yourself from financial adversaries such as
creditors, debt collectors, attorneys, etc. Simple techniques include obtaining an
unlisted phone number and post office box to more advanced maneuvers such
as use of family trusts, corporations, etc.
Cease-Commed: Term used, by the debt collection industry to describe
the status of an account. When a consumer has cease-commed a debt collector
this means that they have invoked federal law by sending a Cease & Desist letter
via certified mail, forcing the debt collector to cease collection activity of that
account.
Certified Mail: Specialized postal service technique utilized to track delivery
and obtain proof of delivery of letters or packages.
Chapter 7: A consumer bankruptcy filing that liquidates all non-exempt
assets to pay off creditors.
Chapter 12: Bankruptcy filing reserved for working ranches, farms, etc.
Chapter 13: A type of consumer bankruptcy filing that allows the consumer
to pay off creditors within a specific time period, no longer than five years. Also
referred to as a "wage eamer" plan.
Chapter 20: Ploy used by some bankruptcy attorneys to delay a foreclosure
of real property by filing a Chapter 13 petition, then quickly converting the filing to
a Chapter 7.
Charge-off: A creditors action taken on an uncollectible account. Alternative
term used: Written Off To Bad Debt Expense. This action normally results in
negative information lines on a credit report that can stay for at least 7 years.
(Also see uncollectible)
Class-action lawsuit: A legal action initiated by 3 or more parties against a
defendant. Many suits in this category are initiated by state or federal attorneys.
Coercion: Exercising force to obtain compliance. A favorite technique
employed by debt collectors and attorneys representing creditors.
Commission: A sum or percentage paid to a person for his successful
completion of services.
Consumer Credit Counseling Service (CCCS): A nonprofit organization that
sells itself to the American public as the last hope for consumers buried in debt.
The reality is that they are actually debt collectors for the original creditors, a fact
that seems to be routinely shuffled aside and not disclosed to the consumer.
Consumer literacy test: A test proposed by the author to be given to high
school students to determine competency in basic consumer skills. These skills
include how to open checking and savings accounts, how to balance a
checkbook, how to create/follow a budget, how credit cards work, a brief
understanding of insurance, etc.
Contingency basis: A fee paid to a third party for their involvement in either
a legal proceeding or debt collection. This fee is normally paid only when a
successful outcome to a legal proceeding or debt has been collected, either in
part or in full.
Credit grantor: Companies or individuals that extend financing to
consumers. A credit grantor can be a mortgage company willing to finance a
house, a bank willing to finance an automobile, or a major national credit grantor
willing to extend credit through the issuance of a charge card such as Visa,
MasterCard or Discover.
Credit manager: Individual that oversees the lending department in a bank,
department store or other credit-granting entity. Many times this individual will
work closely with the collections manager to develop collections strategies for
past due/bad debts.
Credit record: National grading system filed by subject's name, birth date
and social security number. Major companies providing these services include
TRW, TransUnion and Equifax.
Credit repair manual: Derogatory term used by the credit reporting industry
for any books that may show consumers the inside information about their
industry and methods of credit repair.
Criss-cross: A directory, also known as a City Directory, that is frequently
used by the debt collection community to find out information about a debtor's
neighbors. One section lists households and businesses by street address;
another lists all telephone numbers by exchange (in numerical order) and to
whom each number is assigned. A powerful tool of information intimidation
utilized to put fear into unwitting consumers.
Databases: Term used to describe the enormous pools of information
managed by computers. Creditors and debt collectors will access national credit
databases managed by companies like TRW, CSC/Equifax, TransUnion, etc.
Debtors' havens: Term that refers to states such as Texas and Florida
which have liberal laws protecting debtors from creditors.
Deceptive forms: Another trick of the debt collector trade, these forms can
take on a variety of intimidating looks-from threatening (but non-binding)
documents that appear to have been issued by a court of law to demand letters
that look like something issued by the IRS. Of course they're illegal ... you don't
think that will stop the debt collectors from using them, do you?
Deed in lieu of foreclosure: Technique used with mixed results by
consumers unable to continue making payments on their homes. Sometimes
lenders will allow debtors to deed the property back to the lender instead of
suffering through the embarrassment of a foreclosure sale on the courthouse
steps.
Deep discount: When a creditor sells Accounts Receivable or Bad Debts at
an amount normally less than 50% of the outstanding balance.- Many times
these sales are made to companies that specialize in buying these types of
"dead assets."
Defaulted student loans: Loan made to students to attend secondary
educational institutions at low interest rates. These loans were guaranteed by
the federal government as an inducement to banks to make these loans but as a
result, were poorly researched before being made. Over $13 billion of these
loans exist and are now owned by the U.S. government. Revised laws now
enable consumers to restructure these loans. Contact the Department of
Education in Washington, DC.
Deferment: Contractually agreed-to period of time a borrower is allowed to
suspend payment on a debt. Usually applies to student loans and suspends the
accrual of interest or late fees on the outstanding loan balance.
Deposition: Sworn statement made in the presence of a court reporter
(usually) as a result of questions posed by attorneys in court (or post judgment)
action. These statements are normally made outside a court of law, but are fully
admissible during trial and fully binding under perjury statutes.
Discharged: To relieve of obligation, responsibility, etc. Common term used
in bankruptcy court to describe the process of eliminating debtor obligations.
Discounts: Selling Accounts Receivable or Bad Debts at an amount
normally in excess of 5 1 % of the outstanding balance. Many times these sales
are made to companies that specialize in buying these types of "dead assets."
Dispossession of property: Taking away property against the owner's
wishes, normally as a result of non-payment.
Erroneous information: False, misleading or incorrect data. Frequently
found in consumer medical or credit files across America.
Exempt assets: Assets not at risk of being seized or forfeited as a result of
legal action.
Financial management: Technique used to balance income vs. expenses.
Responsible financial management usually results in an excess of monies
available. (This style of managing finances has yet to be mastered by the United
States Government.)
Flaky loans: Questionable loans made by banks in the 1980s such as
student loans or land development loans. (see defaulted student loans)
Fraudulent activity: Transaction designed to swindle consumers or
creditors, normally cheating these groups out of goods, services or assets. (see
sign of the beast)
Freebie report: A copy of your credit report given to you at no charge for
one of two reasons ... every consumer gets a free report from TRW just for
asking and every consumer gets a free copy of their credit report if they have
been declined credit.
Getting bulletproof: The process of insulating a person from lawsuits,
garnishments, creditor intrusion and harassment. Popularized in Texas during
the late 1980s ... now being utilized by consumers/business people in California
and the East Coast.
Hired gun: The hiring of third party debt collectors or attorneys to
emotionally pummel a consumer in hopes of collecting an overdue account.
Hot checks: Drafts on a bank account that will be or have been returned by
the bank for insufficient funds to pay face amount of check issued.
IRS refund offset program: Effort initiated by the Department of Education to
recover defaulted student loans by seizing the tax refunds of consumers with the
assistance of the Internal Revenue Service.
Interrogatory: Sworn statement made in writing as a result of a list of
questions/inquiries by attorneys in court (or post judgment) action
Intimidation: Inspiring or inducing fear (a favorite tactic of debt collection
agencies).
Knee Breaker Collection Agency: Generic name used to describe a
collection agency that may use techniques that are not endorsed by the
American Collectors Association or deemed legal by the federal government
under the Fair Debt Collections Practices Act. (see Vito)
Lawyers: (see Attorneys)
Leverage: A negotiating position of strength; something creditors may
have, debt collectors never have, and consumers almost always have.
Mail drops: Companies like Mailboxes, Etc. and others who provide a
valuable service to consumers wanting to distance themselves from intrusive
individuals such as debt collectors. Allows a new mailing or street address to be
instantly created by consumers trying to insulate their lives.
Medical bills: The number-one reason consumers have been filing for
bankruptcy, medical bills many times can be appealed or I negotiated with the
original provider. It is not uncommon to be grossly overcharged or mis-billed for
medical services, so it's important for consumers to be aggressive when auditing
these statements.
National Foundation For Consumer Credit: Parent organization for CCCS.
(see Consumer Credit Counseling Service)
Negative information (or remarks): Statements or grades assigned on credit
reports due to late payment, non-payment or default on debts owed to creditors.
Bankruptcies and hens also show up under this category. Favorite point of
leverage utilized by collection agencies attempting to passively blackmail
consumers.
Nine-Digit Zip Code: Increasingly becoming a powerful tool for skiptracing,
the 9-digit zip codes allow specific location (if a current address can be located)
of a consumer, courtesy of the U.S. Post Office. (Another compelling reason to
utilize post office boxes or mail drops.)
Non-dischargeable debt: Debt that cannot be eliminated through bankruptcy
court. Some types of IRS debt, student loans and certain types of judgments fit
into this category.
Old debt: Debt that has been charged off/written off by a creditor, normally
referred to an outside 'third party" collector. Old debts are usually those
debts/accounts that have not had charge or payment activity for over 2 years
and are the easiest to negotiate payment/removal from credit reports with
creditors.
Open account: An account with a creditor that is still on the books and, in
the opinion of the original creditor, collectible. These types of accounts usually
are reported/updated to the credit bureaus and report late payments. They can
be the most difficult to negotiate with a creditor.
Oxymoron: A term that contradicts itself, such as "jumbo shrimp" or "military
intelligence" or "ethical debt collector" or "reasonable legal fees."
Paid As Agreed: Old term used on consumer credit bureau reports to
describe an account that may have been renegotiated and/or settled for less
than the full amount. Many creditors are now flagging these notations as
negatives, so it's important that your creditor agrees to delete all information
regarding a settled account, not just re-classify the account as "paid as agreed."
Paralegal: Vague title used (and abused) by many debt collectors to
misstate level of power, prestige or might Threats of lawsuits and jail time are
frequently used by people espousing to be "paralegals".
Password: An identifying word or code that consumers may set up with the
phone company and other service providers that allows only authorized
individuals access to information concerning an account. Unprotected accounts
are frequent targets by the debt collection community in order to obtain
additional information about a consumer.
Positive identification: A means to identify without a doubt the identity of a
consumer wishing to obtain a copy of their credit file. A check and balance
designed to keep unauthorized people from gaining access to your information.
Postdated check: A check with a date in the future, a technique utilized to
connate a person to make payment after the date written on the check.
(Something a consumer should never, ever give to a debt collector.)
Profit & Loss Statement: A valuable accounting function that shows a
reconciliation of all gross income and expenses to offset the same, arriving at a
net profit (or loss) figure.
Prospective creditor: A credit grantor that has not yet agreed to loan/lend
monies for the purchase or a home or automobile, or through the issuance of a
credit card.
Public records: Another terrific source of information tapped into on a
regular basis by the debt collection community, in an attempt to gain insight into
a debtor's activities or current location. Favorite records to be studied by the
debt collectors: Divorce records, property records, tax information and motor
vehicle records.
Red ink: Term used to describe losses sustained by any financial entity.
When individual consumers drown in red ink they may end up filing for
bankruptcy; when the U.S. government engages in this financial activity it holds
another treasury note or bond auction.
Regulatory agencies: Any agency empowered by either local, state or
federal authorities to enforce civil laws, such as the Federal Trade Commission.
Reply card tracer: Used by Postal Service to track down return receipts that
never returned to verify delivery of parcel.
Re-prioritize: The resetting, of priorities in one's life, usually due to a
dramatic change in circumstances. Sometimes a necessary first step toward
solving one's financial problems.
Return receipts: When a letter is sent by Certified Mail, this receipt (green
card for domestic mails/pink card for international) give the sender a record of
who actually received/signed for letter or package sent.
Revolving charge card (or credit line): Commonly issued by major
department stores and major banks, it requires a monthly payment sufficient to
amortize the outstanding balance. Example: If consumers pay only the minimum
balance on a $10,000 credit card and do not use the card for any additional
purchases, it will take over 25 years to amortize/pay off the debt.
Risk free: A concept used in lending to describe the risk vs. return of certain
types of consumer/business loans. Also refers to overdraft protection checking
accounts at the House of Representatives bank in the 1980s.
Roll over: What many consumers do when dealing with credit bureaus or
collection agencies, giving up without a fight. Also used to describe the apathy
displayed by most Americans when asked about their input in the law
making/enforcement process or budgetary responsibility of congress.
Scam: Fraudulent plan or scheme designed to separate a consumer from
their money without delivering on promised goods, services (training) or value.
Scoring system: A tool used by prospective lenders to grade the creditworthiness
of a potential borrower.
Secured creditor: Creditor whose financial position is secured by real
property, such as a bank or finance company with a lien on an automobile or a
mortgage company secured by the house they financed. hi the event of default
the secured creditor can repossess or foreclose on the property they financed,
greatly reducing their chance of total loss exposure.
Secured credit card: A major national credit card (normally Visa or
MasterCard) that has a credit limit secured by a cash deposit placed with the
issuing bank by the cardholders A positive recovery step for consumers who
have gotten into credit problems but need a credit card in order to get a hotel
room, a rental car or other business/travel- related activities.
Sign of the beast: A reference to Satan in a passage from the Revelations
chapter of the Bible; also used as a derogatory term describing debt collectors
and some attorneys.
Skip and skiptracing: Technique used by creditors and collection agencies
to find consumers that are suddenly difficult to locate (skips). No magic here,
just instant access to enormous databases containing a variety of information
that, in most cases, will lead the debt collectors to your new front door.
Snake oil: A negative term used normally by an individual to discredit
another. Refers to selling or promoting something that falsely claims inflated
results or expectations. (A favorite term of the American Collectors Association,
a trade group representing debt collectors across the U.S.)
Social security number: A nine-digit number issued by the Health and
Human Services Administration to identify Americans for future social security
benefits. This number has evolved into the years as a national identifier for
Americans, a serial number now used for referencing credit information files,
military and school records, etc.
Telephone recording device: A $20 device sold by national electronic
retailer Radio Shack that allows consumers to tape telephone conversations for
later review. A great equalizer when being harassed by a debt collector who
thinks he's above the law.
Tele-terrorist: Term coined by this author to describe today's debt collectors
who use the telephone or telefax to threaten, intimidate or coerce consumers
into making (more) poor financial decisions.
Third-party debt collector: Collection agency or attorney engaged in the
business of collecting debts that they did not originate. Usually taking these
accounts on a contingency basis, the majority of these collection agencies work
on a commission basis. The Fair Debt Collection Practices Act specifically
regulates the activities of this type of collection agent.
Threats: An indication or warning of probable trouble, often illegally used by
debt collectors. (see debt collectors or Vito)
Time-Value of money: A concept used by a large number of groups
involved in money and finance. When relating to the debt collection business,
it's an accepted fact that the longer an account goes without payment or reduced
payments, the lower the chances of collecting the entire amount.
Trial by fire: Term used by individuals, often average consumers, who have
acquired "street smarts" by dealing directly with their financial problems. These
individuals frequently include graduates from the "school of hard knocks."
Uncollectible: Term used by creditors to describe an account that has gone
past a certain period of time without payment, usually at least 6-9 months.
Underground: Another term commonly used for someone who has dropped
out of sight or "skipped." Usually the result of incessant threats and phone calls
from unethical debt collectors.
Unscrupulous tactics: Any number of techniques used by debt collectors in
order to collect money on overdue accounts from unsuspecting consumers.
Unsecured creditor: Creditor who has no collateral covering their financial
exposure. Almost all credit or charge cards fit into this category. The weakest
position to be in during tough financial times, unsecured creditors are the largest
employers of third-party debt collectors.
Vito: Name used to describe any individual in the debt collection industry
who may use techniques that are not endorsed by the American Collectors
Association or deemed legal by the federal government under the Fair Debt
Collections Practices Act.
Vocational school: Non-traditional institution of higher learning designed to
train students in job skills as opposed to educational degree plans in specific
areas of study. Vocational schools can graduate students in 6- to 24-month
course studies as opposed to 48 months in traditional colleges/university
programs. This type of school is coming under increasing scrutiny by the
Department of Education.
Wage-earner plan: Alternate term used to describe a Chapter 13
bankruptcy. This plan allows consumers to pay off creditors over a period not to
exceed five years.
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