Glossary of Terms - In order to help people understand the collection agency business, here is a glossary of often used terms.
Accord and Satisfaction- Both parties agree to accept a settlement agreement and the claim is satisfied and discharged.
Acknowledgment- Admit, affirm, or confess; a partial payment of a debt is a acknowledgment of it.
Action- Case or lawsuit.
Actionable- Sufficient legal grounds for a lawsuit.
Affidavit- Written statement of facts sworn to or affirmed by someone who is authorized to administer oaths.
Agent- Someone who is authorized to act on behalf of another.
Arbitration- When a dispute is submitted to a third party who will decide the award in which both parties agree in advance to comply with.
Assignment- Transfer of property rights to another.
Bankruptcy- Federal procedure in which a debtor is relieved of total liability for his/her debts by making arrangements for their partial payment.
Bulk Transfer / Sale- A bulk transfer or sale of all or most of the business’s supplies or inventory not done in the ordinary course of business.
Claim- Demand or assert a right, such as the right to payment.
Closing Letter- Letter sent out by attorneys when a file is closed.
Collection Agency- Third party agency that helps creditors get paid.
Commission- Compensation for services in the effort of collecting a claim.
Cost Advance- Sum of money advanced by the creditor from which court costs are to be paid with.
Counterclaim- Claim by defendant opposing the claim of the plaintiff.
Default Judgment- A judgment awarded when the defendant refuses or fails to respond or appear.
Defendant- Party sued in a lawsuit.
Demand letter- Letter sent to the defendant to notify the debtor that the client has hired someone to collect the debt.
Discharge- To pay one’s debts or fulfill obligations.
Dismissal- Termination of a case prior to a normal end.
Execution- To carry out an act or course to completion. A process where an official can attempt to enforce a judgment.
Filed Answer- In writing the debtor states he will either pay the debt or disputes it.
Forwarder- A third party, such as a collection agency, that acts on behalf of a creditor which refers claims to an attorney for collection.
Forwarding Contract- A contract between the creditor or forwarder and receiver.
Garnishment- Legal procedure where a creditor can collect a debt by reaching the debtor’s property when it is being held by a third party, this can include taking a portion of wages.
Guarantee- To agree to be responsible for someone else’s debt when they are unable to pay.
Indemnity- Restitution or reimbursement for loss, damage, or injuries.
Insolvency- The condition where a person is unable to pay his or her debts when they become due.
Joint Liability- When two or more parties are liable for a debt.
Judgment- Decision by a court where an official amount owed by the debtor is awarded.
Lien- Where the owner of property gives the right to secure a debt.
Negligence- Conduct that fails to match standards of behavior set by law where injury or damage can occur.
Plaintiff- The party that brings forward the claim in an action or proceeding.
Satisfaction- Discharge of an obligation when a debt is paid for.
Settlement- When a debtor offers a sum of money or property to settle a debt.
Skip- When a debtor leaves or changes all contact information and cannot be located.
Skiptracing- The act of locating a debtor.
Statute of Limitation- A law which limits how long before the right to sue is lost.
Writ- An order given by a court that requires something to be done or giving authority for someone to perform a specific act.
