Credit Report

Commonly Used Debt Management Terms

There are some commonly used debt management terms that must be known to you if you plan to go for a debt management service. The debt management services particularly relate to financial facts. These terms must be known to you so that you can understand how to go about you debt management program. So, let us take a look at some of these debt management terms.

Bankruptcy

Bankruptcy is a legal process where a debtor requests the court for providing him or her, a relief from their lenders and creditors. As the debtor files for bankruptcy, the state’s court discharges those present debts, then recommends for a payment method, or it dismisses the case. The bankruptcy details will remain stated on the credit report for as long as 10 years from the period you file for bankruptcy assistance.
The ratio of debt to the income:
The ratio of your debt to your income is calculated as a percentage of the income that follows up in relation to payments required for your debt. The ratio is calculated by finding ratio of the expenses on your monthly debt and the monthly income earned by you, which is then multiplied by 100.
Your ratio of the debt to your income can be used to estimate as to whether your expenses are heavily related to the payments to be made on your debt. A lot of lenders, and in particular the mortgage lenders make use of the ratio of your debt to your income for deciding on whether to give you a loan or not. If the ratio of your debt to your income is very big, your request for a loan may be rejected. This ratio is also known as the DTI ratio.

Judgement

Judgement is a court order which states that a fixed sum of money has to be paid to an entity who has filed a complaint against you. If a creditor, debt collector, lender, attorney, or any other party files a complaint against you and the case does not go in your favour, then a judgment has to be made against your name. The judgment will be stated on your credit report and it will stay for a period of seven years from the time the complaint was filed.

Statute of limitations

This term is defined as the number of times a creditor or debt collector in the form of a third party obtains a judgement against you in regard to a debt. The important thing to note is that you are still eligible to be charged for the debt. Hence, you are responsible to be present for any complaint related cases and to verify that the statute of limitations has been terminated.
These are some of the important terms that must be known by you if you are in to a debt management program or are planning to go for a debt management program.