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Commonly Misused Collection Agency Terms |
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Bad Consolidation Credit Debt – Although this combination of words may
be used in search engines such as Google, the phrase is not commonly used in
the credit industry. Individually, the words are common credit/debt terms. More
common and accepted phrases would be “debt consolidation” or “bad debt.”
Bad Credit Debt- Unusual to see these three words linked as a phrase.
Common and accepted terms would be “bad debt” and “bad credit.” Bad debt
typically refers to obligations that have been deemed by the creditor to be
difficult or impossible to collect. Bad credit is a state established by an
individual or business due to a negative history of paying financial
obligations late or not at all.
Business Debt Consolidation – Usually refers to a business that utilizes
a third party to negotiate an arrangement with creditors whereby the business
debt is paid out to the creditors over a modified and agreed upon schedule.
Typically, the third party collects a monthly lump sum from the debtor company
and in turn acts as a disbursement agent by paying the obligations of the
business pursuant to the agreed upon plan.
Collection Debt – Again, an odd combination of words. Debt refers to the
financial obligations owed to a creditor or lender. Collection is the process
of receiving the obligation. Collection activity can refer to the efforts of
the creditor, a third party collection agency or an attorney.
Collection Debt Letter – A written demand sent to a debtor that owes an
obligation. Often referred to as a dun letter.
Collection Debt Letter Sample – Sample collection (or dun) letters are
available from many sources, including the National Association of Credit
Management (NACM).
Credit Collection Agency – Usually refers to a business or agency that
specializes in two areas: (1) A Credit Reporting Agency gathers historical
credit data and combines the information on a format that is utilized by credit
grantors to determine credit risk pertaining to the potential borrower.
(2) A Collection Agency is a third party specializing in the intervention
and collection of delinquent accounts and obligations.
Debt Consolidation – A strategy whereby a debtor utilizes a qualified
third party to negotiate a fair and equitable repayment plan with the
creditors. Typically the creditor makes a single monthly payment to the third
party who in turn disburses the funds to the creditors.
If you have a
commonly misused word or phrase you would like to add please write us at info@ecollectionletters.com
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