Debt Consolidation Terms

Consolidation

Consolidation, or debt consolidation, is where you consolidate all your outstanding debts into the one loan in order to simplify repayments and to save on interest.

Default

A failure to abide by the terms of a mortgage or loan agreement. A failure to make loan payments (defaulting on the loan) may result in the mortgage holder or security holder taking legal action to repossess the mortgaged or secured property.
 

Debt Settlement

Settlement refers to the finalisation of a loan or final repayment of debt.
 

Bad Credit Rating

Bad credit generally refers to cases where a person has failed to repay a loan or other debt and therefore receives a bad credit rating. This bad credit rating is reflected on the person’s credit report in the form of a default, judgment, dispute or bankruptcy.
 

Bankruptcy

Bankruptcy may occur when an individual or business is unable to meet their debt repayment obligations. Bankruptcy involves handing over the control of property and finances to a trustee in exchange for protection from legal action by those whom you owe money - your creditors.
 

Insolvent

If you are insolvent, you are unable to repay your debts when they fall due or your liabilities are greater than your assets.
 

Unsecured Debt

Unsecured debt refers to any debts that are not backed by assets. Examples of unsecured debts include credit card and store card debts and personal loans.
 

Arrears

An overdue amount that has not yet been paid

Bad Credit Loan

A person with credit problems may be able to obtain a bad credit loan including a home loan, credit card or personal loan. Generally the interest rates will be higher on these loans
 

Income Statement

A statement of income and expenditure for a period.
 

Indemnity

Indemnity is a legal exemption from the penalties or liabilities incurred by any course of action. An insurance payout is often called an indemnity, or it can be insurance to avoid paying expenses in case of a lawsuit.
 

Delinquency

Failure of a borrower to make timely mortgage repayments under a loan agreement.
 

DSR

Debt Service Ratio - maximum of a loan applicant's weekly, fortnightly or monthly wage which will support loan repayments over the agreed loan term. Usually expressed as a percentage.
 

Garnishee Order

A fixed amount of money deducted from your wage or salary. A garnishee can also be obtained against bank accounts and debtors’ ledgers or any other situation where you may have cash assets.
 

ITSA

Insolvency and Trustee Service of Australia is a Executive Federal Government Agency with six Australian jurisdictions controlled by an Official Receiver.


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