Amortization, or loan amortization, refers to how loan payments are spread out over a fixed time period, how much of each payment goes to interest charges, and how much is applied to the principal balance owed.
A visual breakdown of loan amortization, including the total number of payments that will be made, when each payment is due, and how much of each payment is applied to the principal and interest.
An appraisal is a professional assessment of a home's value. It’s typically required when you get a mortgage, home equity loan, or home equity line of credit (HELOC).
Bankruptcy is a formal legal procedure for dealing with debt through the court system. Bankruptcy protects debtors (the ones who owe money) and creditors (the ones who are owed) when unforeseen events prevent the agreed-upon repayment of debts. Most individuals file either Chapter 7 or Chapter 13 bankruptcy.
A bankruptcy judge is someone who oversees bankruptcy proceedings and rules on motions. The bankruptcy judge decides whether the person is eligible to file, and ultimately decides the final outcome of the case.
Chapter 7 bankruptcy discharges (wipes out) many types of debt. In exchange, the person filing (the debtor) may have to give up some of the things they own (their assets).
A collection agency is a business that collects unpaid debts. The agency may collect money for the original lender or may be a debt buyer that buys the right to collect the debt.
A collection agency is a business that collects unpaid debts. The agency may collect money for the original lender or may be a debt buyer that buys the right to collect the debt.
A combined loan-to-value (CLTV) ratio is your total home debt compared to your home’s market value. CLTV includes your mortgage, if you still have one, and any home equity loan or HELOC you have or want. You get your CLTV by dividing the total debt by the value of your home.
A credit bureau is a company that gathers information about your experience with credit accounts. They put it into a credit report that lenders can purchase when you apply for credit. The three major credit bureaus in the U.S. are Experian, TransUnion, and Equifax.
Credit counseling could help you master your finances. Credit counseling is a service, usually offered by nonprofit groups, that helps people get a handle on their finances, especially when they're learning money management or dealing with debt.
Credit counseling could help you master your finances. Credit counseling is a service, usually offered by nonprofit groups, that helps people get a handle on their finances, especially when they're learning money management or dealing with debt.
A credit report is a collection of financial information about you and your credit accounts, which includes credit cards, loans, or lines of credit you have.
Your credit score is a three-digit number based on your experience with credit. Credit scores are calculated using the information in your credit reports.
Your credit utilization ratio is the revolving debt balance that you owe compared to your credit limit. It’s expressed as a percentage. Higher utilization can hurt your credit scores.
Your credit utilization ratio is the revolving debt balance that you owe compared to your credit limit. It’s expressed as a percentage. Higher utilization can hurt your credit scores.
A debit card is a plastic or metal card linked to a checking account. You can use it to withdraw or deposit cash, or to make purchases with the money in the linked account.
A debt collector is a person or company whose primary purpose is to collect debts. Debt collectors can include debt buyers, collection agencies, and lawyers, and there are laws and rules they have to follow.
A debt collector is a person or company whose primary purpose is to collect debts. Debt collectors can include debt buyers, collection agencies, and lawyers, and there are laws and rules they have to follow.
Debt relief is any action that helps you manage or deal with your debts. Sometimes debt relief involves reorganizing your debt to make it more manageable. Debt relief could also mean resolving the debt for less than the full amount you owe.
A debt validation letter is a request you send to a debt collector, asking for detailed information regarding your debt. It's your way of ensuring a debt is yours.
A debt validation letter is a request you send to a debt collector, asking for detailed information regarding your debt. It's your way of ensuring a debt is yours.
A debt validation notice is a written notice from a debt collector to you. It gives you detailed information about the debt they're trying to collect. The Fair Debt Collection Practices Act (FDCPA) is a federal law that requires debt collectors to send you a debt validation notice.
A debt validation notice is a written notice from a debt collector to you. It gives you detailed information about the debt they're trying to collect. The Fair Debt Collection Practices Act (FDCPA) is a federal law that requires debt collectors to send you a debt validation notice.
Your debt-to-income (DTI) ratio is the proportion of your income that goes to debt repayment and housing expenses each month. Lenders can use DTI to determine whether you have enough room in your monthly budget for a new loan.
A debtor is a person who owes money to a creditor. In a legal proceeding like bankruptcy, the debtor is the one asking for relief (debt forgiveness) under the bankruptcy code.
When you’re in a debt relief program, deposits are automatic, scheduled transfers from your bank account into your Dedicated Account (or program account). The debt settlement company uses the deposits in your Dedicated Account to fund negotiated agreements with your creditors.
A desk appraisal is a home appraisal that's done remotely, rather than in person, when someone applies for a home equity loan or home equity line of credit.
A discharge is a court order from a bankruptcy judge that releases the person who filed for bankruptcy from the dischargeable debts listed in the bankruptcy case. In other words, those debts are wiped out.
Fair market value (FMV) is the price a buyer would pay to purchase a home, given the current market conditions and supply and demand. You can ballpark your home’s fair market value using online real estate sites, but lenders rely on sophisticated valuation software or a licensed real estate appraiser.
A home equity loan is a loan against your home equity (the difference between your home’s value and the amount you still owe on your mortgage). A home equity loan is a mortgage.
Judgment-proof means you don’t have enough income, money, or other assets to satisfy a legal judgment against you. In other words, even if a creditor sues you and wins, there's nothing they can legally take from you.
A loan agreement spells out the terms of a loan and the rights and responsibilities of both the borrower and the lender. This agreement is a binding contract once signed by both parties.
Loan-to-value (LTV) ratio refers to the percentage of your home’s value still owed to a lender. LTV is commonly used by lenders when you apply for a mortgage or home equity loan.
A mortgage is a secured loan that’s guaranteed by real estate. If you don’t repay the loan as agreed, the lender could sell the real estate to recover the money you owe. If you do repay the loan as agreed, the lender is legally obligated to release its claim on the property to you.
Negative amortization is when a loan balance goes up instead of down over time. It could happen when a borrower's monthly payment isn't enough to cover the interest charges.
Non-dischargeable debt is debt that can’t be wiped out in bankruptcy. This category typically includes child support, most government-backed student loans, certain fines, restitution, and recent tax debt.
When you're pre-approved for a loan, it's a sign the lender has studied your credit profile and determined that you're likely to be approved for the loan.
A prepaid card is a payment card that allows you to spend the money that’s already in the account associated with the card. Prepaid cards typically have major credit card logos on them and look just like any other credit card or debit card.
Reaffirmation is an arrangement in which a Chapter 7 bankruptcy filer continues paying a dischargeable debt (such as an auto loan), usually so they can keep the collateral (i.e., the car).
Revolving credit is a continuously open line of credit that remains available over time, even after you pay the entire balance. Revolving credit typically comes with a predetermined spending limit.
A letter from your creditor explaining that your debt is closed, that the creditor accepted less than the full amount you owed, and that the balance was forgiven.
Settlement authorization is a process that helps protect all parties involved in debt relief by establishing clear boundaries for negotiations and ensuring that any agreements reached are legally binding.
Zombie debt is old debt that may not be collectible because the statute of limitations has passed, or because it doesn't belong to the person being contacted.