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National Association of Credit Managers
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  Commonly Misused Collection Agency Terms
  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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