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Factor
in determining creditworthiness. Capacity is assessed by
weighing a borrower's earning ability and the likelihood of
continuing income against the amount of debt the borrower
carries at the time the application for credit is made.
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Chapter
of the Bankruptcy Code that provides for court administered
liquidation of the assets of a financially troubled individual
or business.
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Chapter
of the Bankruptcy Code that is usually used for the
reorganization of a financially troubled business. Used as an
alternative to liquidation under Chapter 7. The U.S. Supreme
Court has held that an individual may also use Chapter 11.
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Chapter
of the Bankruptcy Code adopted to address the financial crisis
of the nation's farming community. Cases under this chapter
are administered like Chapter 11 cases, but with special
protections to meet the special conditions of family farm
operations.
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Chapter
of the Bankruptcy Code in which debtors repay debts according
to a plan accepted by the debtor, the creditors and the court.
Plan payments usually come from the debtor's future income and
are paid to creditors through the court system and the
bankruptcy trustee.
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Action
of transferring accounts deemed uncollectible to a category
such as bad debt or loss. Such accounts will usually continue
to be worked by collectors, but are no longer considered part
of a company's receivable or profit picture.
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Any
court action against a consumer to regain money for someone
else. Usually, it will be a wage assignment, child support
judgment, small claims judgment or a civil judgment.
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The
amount awarded
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The
date the account was closed.
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A
creditworthy co-maker is sometimes required in situations
where an applicant's qualifications are marginal. A co-maker
is legally responsible to repay the charges in the joint
account agreement.
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Consumer Credit Counseling
Service
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A
non-profit organization that assists consumers in dealing with
their credit problems. Consumer Credit Counseling Service has
offices throughout the United States that can be located by
calling 1-800-388-CCCS (2227).
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Person
who pledges in writing as part of a credit contract to repay
the debt if the borrower fails to do so.
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Credit Limit/Line of Credit
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In
open-end credit, the maximum amount a borrower can draw upon
or the maximum which an account can show as outstanding.
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A
local credit bureau that contracted with Experian or other
Agency to service consumers in a particular ZIP code area.
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Information
reported by current or past creditors.
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Confidential
report on a consumer's payment habits as reported by their
creditors to a consumer credit agency. The agency provides the
information to credit grantors who have a permissible purpose
under the law to review a consumer's report.
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Tool
used by credit grantors to provide an objective means of
determining risks in granting credit. Credit scoring increases
efficiency and timely response in the credit granting process.
Credit scoring criteria is set by the credit grantor.
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The
ability of a consumer to receive favorable consideration and
approval for the use of credit from an establishment to whom
they applied.
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A
loan with a balloon payment requires that a single, lump-sum
payment be made at the end of the loan.
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Federal
laws governing the conditions and procedures under which
persons claiming inability to repay their debts can seek
relief.
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