Credit Repair Definitions

Here are some common Credit Repair Definitions:

Short Sales: This is a process in which a lender agrees to receive a lower amount of an owed debt in exchange for the sale of the property to a third party.

Credit Fraud (also known as identity theft): Is the crime of stealing someone’s personal, identifying information for the purpose of using that information fraudulently. Personal, identifying information includes: Social Security Numbers, credit card and banking account numbers, usernames, passwords, and patient records. Fraudulent uses for that information can often include: opening new credit accounts, taking out loans in the victim’s name, stealing money from financial accounts, or using avaiable credit.

Collections: Are the same as a companies bad debts. they are accounts receivable that will likely remain uncollectible and will be written off by the original creditor. Specific examples are credit cards, utilities (which include telephone, elecric, water, gas and scavenger) unpaid medical bills, cellular phone bills, unpaid library fees, red light tickets issued by a municipality, unpaid tolls to highway authorities and numerous others. These comprise any and all amounts you owe that you have not paid to the original creditor or a subsequent creditor who has purchased your account and debt. A common example of a collection is the unpaid remaining balance owed on a car repossessed that has been sold to a third party or at an auction. The additional repossession costs are also included in the collection amount by the original creditor.

Late Payments: Any payment that is “posted” after the due date. Can be reported to the three (3) credit bureaus as a negative item.

Charge-Offs: This is the term that creditors use when they determine that they are not able to collect a debt that is owed to them and they write that debt off from their books, however, it does not let the debtor off the hook for financial responsibility. This is also not a “forgiven” debt. The money is still owed and the creditor will usually turn this account over to a collection agency or attorney in an effort to collect. A chargeoff usually occurs when the debt has gone without payment for a specific period of time determined by the original creditor. This also occurs when the debtor has made no attempt to work with the creditor to negotiate new payment terms. At this point in time, the credit bureau notified of a charge off situation. A reasonable rule of thumb would be that having one or more unresolved charge offs usually results in the debtor being denied credit by other lenders. It can also affect the interest rate that other lenders charge on current debts even if those lenders were not impacted by the charge off themselves.

Liens: Legal claims against an asset (something of value) which has been used to secure a loan and which must be paid when the property is sold. Liens can be structured in many different ways. In some cases, the creditor will have legal claim against an asset, but not actually hold it in possession, while in other cases the creditor will actually hold on to the asset until the debt is paid off. A claim can hold against an asset until all the obligations to the creditor are cleared (a general lien) or just until the obligations against that particular asset are cleared (a particular lien). Specific examples are a lien against your personal automobile, a taxi, a limousine, the deed against your house because of a mortgage. Many times mechanics or contractors will file a lien against your property until the work is completed and full payment has been made.

Bankruptcies: Bankruptcy stops a foreclosure process until the bankruptcy process is completed or the court allows the lender to resume the foreclosure.
There are different types of bankruptcy, each with different rules governed by laws. Nationwide Credit Clearing is able to legally challenge a bankruptcy on your credit report one year subsequent to it being discharged. For more specifics, please contact our office.

Repossessions: To regain possession of property, especially for nonpayment of money due under an agreement. Primary example would be the repossession of an automobile, truck, bus, taxi, limousine by the original or subsequent lender in accordance with the terms of your loan or lease.

Foreclosures: A process in which a lender attempts to recover the amount owed on a defaulted loan. The lender has the option of selling the property or repossessing the property. The beginning of a foreclosure process starts after the borrower defaults on mortgage payments and the lender files a Notice of Default or Lis Pendens.

Judgments: This is the final ruling of the court at the end of a trial. The judgment may be rendered by a jury or a judge. It is based upon the appliation of the law to the pleadings and to the facts as they appear from the evidence of the case. A judgment is procured after all collection attempts have failed with the debtor (defendant). Generally the losing defendant will be ordered to pay the plaintiff (creditor) monetary damages or perform their obligation on a contract. Judgments will remain on your credit reports for a period of seven (7) years unless legally challenged for removal.