A term used by insiders to describe the debt collection industry.
Active transportation
Transportation policy or choices that prioritize walking, biking,
mopeds, scooters, trolleys, buses, shuttles, light rail, local,
regional, and continental train systems over automobiles.
Adjustable rate mortgage (ARM)
A type of mortgage where the interest rate paid on the outstanding
balance changes according to a specific indicator, often out of
the control or knowledge of the borrower.
Affidavit
A voluntarily written statement made by a person under oath.
Affiant
A person who swears to an affidavit.
Affordable Care Act (ACA)
President Obama’s health care reform law signed in 2010, parts of
which go into effect in 2014. The law has the stated intent of
making health care more affordable, although at least 23 million
people will remain uninsured. It has been criticized for widely
expanding the role of private health insurance and for-profit
care, rapidly transferring public money to private hands through
the individual mandate. Also referred to as the Patient Protection
and Affordable Care Act (PPACA) or Obamacare. See
individual mandate.
Alternative financial services (AFS)
See fringe finance.
Amenable mortality
A death that could have been prevented with access to effective
health care.
Annual percentage rate (APR)
The rate of a loan’s interest, expressed as the amount that would
be accrued over the course of a year.
Asset
Anything of economic value owned by a person or company, the value
of which may be expressed in cash.
Austerity programs
Cuts to government spending on social programs justified as a
means of balancing municipal, state, and national budgets in times
of financial distress.
Auto debt
See car debt.
Auto-title loan
When a borrower exchanges their automobile’s title for cash,
generally for about one-quarter of the vehicle’s value, with a
high APR. The vehicle can still be driven, however, during the
loan’s duration.
Bankruptcy
A court-supervised legal process in which the debts of an
individual or business in financial distress are restructured or
dismissed.
Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)
Passed in 2005 as the result of massive lobbying on behalf of the
credit industry, BAPCPA is a harsh reform to the federal
bankruptcy code that makes it significantly harder and more
expensive for debtors to file.
Capital gains
Profits obtained by selling assets, for example, a home, family
business, stock, or bond.
Capitalism
An economic system, or mode of production, in which the bulk of
the means of production are privately owned, products are
exchanged in a market (i.e., the primary determinant of prices is
competition among individual enterprises trying to make a profit),
and most people work for others, who own the means of production
in exchange for wages or a salary.
Car debt
Debt incurred by the purchase, use, and maintenance of an
automobile.
Carbon emissions
The release of carbon dioxide into the earth’s atmosphere
primarily from the use of oil, natural gas, coal, and other fossil
fuels which results in an increase in the average global
temperature.
CARD (Credit Card Accountability Responsibility and Disclosure)
Act
The CARD Act of 2009 requires card issuers to determine a
consumer’s ability to pay prior to increasing a credit limit or
opening a new credit card account.
Chapter 7 bankruptcy
One of the two main chapters in the federal bankruptcy code under
which individuals may file, Chapter 7 wipes away all consumer,
medical, and other unsecured debts, but does not discharge certain
tax debts, student loan debt, or debt from alimony and child
support obligations.
Chapter 13 bankruptcy
One of the two main chapters in the federal bankruptcy code under
which individuals may file, Chapter 13 emphasizes the
restructuring of an individual’s debts as opposed to outright
dismissal, allowing the debtor a chance to retain some important
assets.
Check-cashing outlet (CCO)
A store where people can cash checks for a fee, often used by
people who don’t have a checking account.
Churning
A process whereby lenders prolong the duration of debt in order to
extract as many fees as possible.
Climate change
Severe and sudden changes in the earth’s atmosphere and weather
patterns brought about by human activity. Although technically the
earth’s climate is constantly changing over vast periods of time,
drastic increases in greenhouse gas emissions over the past two
centuries have had unprecedented and profound impacts on the
planet, and thus the term “climate change” primarily refers to
human-induced changes.
Climate debt
Originally known as “carbon debt,” the term “climate debt” refers
to a measureable ecological obligation from the world’s wealthiest
countries to the global South, calculated with the understanding
that the former are responsible for most greenhouse gas emissions,
while the latter tends to suffer the harshest consequences.
Contrasted with the monetary debts imposed by the richest nations,
the concept of climate debt challenges conventional assumptions
regarding who owes what to whom.
Collection agency
A business that profits through the collection of debts and
interest owed by individuals or businesses.
Commons
Natural, intellectual, and social resources for which access, use,
and management are shared among members of a community.
Consolidation
Combining several loans into one larger loan from a single lender
in order to pay off the balances on the others.
Consumer Financial Protection Bureau (CFPB)
An independent U.S. federal agency whose stated purpose is to
regulate financial institutions such as banks, payday lenders, and
collection agencies, and to protect consumers from fraudulent or
misleading financial products and services. The CFPB was created
in 2011 following the passage of the Dodd–Frank Wall Street Reform
and Consumer Protection Act.
Copay
The portion of payment for a medical service that is provided by a
person with insurance. Higher copays often deter insured
individuals from seeking care, resulting in them being effectively
uninsured.
Corporate welfare
A term used to describe when a government gives tax breaks or
other special treatment to corporations, in contrast to the
characterization of poor people as undermining the system through
use of social services.
Credit card receivables
A projection of a credit card companies’ future business income
that consists of all the interest that could potentially be
collected from cards issued.
Credit report
A document produced by a credit reporting agency (CRA) summarizing
a person’s credit history. Information in credit reports factors
critically in decisions to grant credit (e.g., mortgage loans,
auto loans, credit cards, and private student loans) and in other
financial spheres, including eligibility for rental housing,
setting premiums for auto and homeowners insurance in some states,
and employment. See credit reporting agencies (CRAs).
Credit reporting agencies (CRAs)
Companies that gather, organize, and standardize certain consumer
financial information such as credit card balances, payment
history, and outstanding student loan debt and then sell this
information to banks and other creditors. Increasingly, this
information is also being sold to employers, insurers, and
consumers themselves. The largest CRAs known as the “Big Three,”
or the “national” CRAs are Equifax, TransUnion, and Experian.
Credit score
A number produced by inputting a person’s credit information from
their credit report into a proprietary algorithm. Credit reporting
agencies (CRAs) generate this number and provide it to banks or
other financing companies, which use it to decide whether to lend
to someone, and at what interest rate. Scores have different
ranges, the most common one being 300 to 850, with a higher number
signifying greater “creditworthiness.” Increasingly, credit scores
are used in other major decisions besides lending, such as
employment and housing. See credit report and
credit reporting agencies (CRAs).
Creditor
A person or institution to whom money is owed, typically as the
result of a legally binding loan agreement.
Currently not collectible
A program where the IRS voluntarily agrees not to collect on one’s
tax debts for approximately one year.
Data-mining
A process of analyzing large amounts of data to discover patterns,
often used by businesses to determine sales trends and increase
profit.
Deductible
The expenses expressed as either a flat rate or a percentage of
all costs that must be paid out-of-pocket by the patient before an
insurer will pay any remaining costs.
Default
Failure to make required payments on debt on time.
Deferment
See student loan deferment.
Department of the Treasury
The accounting arm of the U.S. federal government, responsible for
the collection of all incoming revenue as well as the payment of
all federal obligations. Where revenue falls short of covering
operating expenses, the Treasury issues government debt in the
form of bills, notes, and bonds. The Treasury is also responsible
for printing currency.
Disaster capitalism
The exploitation of natural disasters to promote market-based
redistribution from the poor to the wealthy, and the outsourcing
of basic services like education, health care, and housing to
private providers at the local level.
Disposable income
The amount of one’s income after legally required deductions are
made, such as taxes and employee retirement systems.
Ecological debt
See climate debt.
Electronic Benefit Transfer (EBT) card
A card issued by government agencies and used by cardholders to
access benefits such as food stamps, unemployment compensation,
veterans’ benefits, etc.
Eminent domain
The power of the government and quasi-public development
corporations to seize privately owned land. Land seized through
eminent domain must be used for the “public benefit,” loosely
defined. It may remain property of the state or may be immediately
transferred to private developers with the often-vague mandate to
foster economic development.
Fair Credit Reporting Act (FCRA)
Passed in 1970 in response to the increasing concentration of
personal consumer credit information in the hands of a few
national credit reporting agencies, the FCRA sets out a number of
requirements and rules for all agencies that compile consumer
credit reports on individuals nationwide.
Fair Debt Collection Practices Act (FDCPA)
A 1977 amendment to the Consumer Credit Protection Act (1968) that
makes certain abusive debt collection practices illegal.
Fannie Mae (Federal National Mortgage Association)
A U.S. federal program created in 1938 as part of the New Deal to
expand the homeowner population by loaning money to people who
previously didn’t qualify. Fannie Mae was privatized in 1968.
Federal Housing Administration (FHA)
A U.S. federal program created in 1934 with the express purpose of
insuring mortgage loans from banks and other parties in the
private sector.
Federal Reserve Bank
The national bank of the United States, which is a central banking
system with twelve branches spread across the nation. It controls
monetary policy and has supervisory and regulatory authority over
the nation’s private banking system.
FICO score
The most common type of credit score. Credit reporting agencies
(CRAs) calculate this score by taking financial data about a
consumer and plugging it into an algorithm created by the Fair
Isaac Corporation (hence the name “FICO score”). This algorithm is
proprietary and secret. The score’s range is 300 to 850, and the
median score is about 720. If someone’s score is above the median,
they will likely have access to the best credit terms. About 20%
of the U.S. population does not have a FICO score because there is
not enough information in their credit report, which has a
negative impact on their ability to get loans. The majority of
lending decisions in the United States are made using the FICO
score. See credit reporting agencies (CRAs) and
credit score.
Financialization
A process whereby economic growth becomes increasingly dependent
upon money earned through investment and speculation, and whereby
financial institutions increasingly influence economic policy.
Forbearance
See student loan forbearance.
Foreclosure
The process by which a lender secured by a mortgage or deed of
trust engages in the eviction and subsequent sale of property to
recover money unpaid by the borrower.
Free schools
Grassroots-organized schools emphasizing the exchange of knowledge
without hierarchy or institutional structures.
Fringe finance
An array of predatory “alternative” financial services (AFS)
usually offered by providers that operate outside of federally
insured banks. Services include check cashing, remittances/money
transfers, prepaid cards, payday loans, pawnshop loans, auto-title
loans, and rent-to-own agreements.
G20
A group of finance ministers and central bank governors from
nineteen countries plus the president of the European Council and
Head of the European Central Bank, representing twenty major
economies. The G20 has been meeting once or twice a year since
November 2008, and has the stated goals of achieving “global
economic stability” and “sustainable growth,” although each summit
has faced resistance due to a myriad of criticisms, including the
group’s lack of transparency and inherently undemocratic nature.
G8
Heads of governments of eight major national economies who meet
annually to discuss international issues and are routinely
criticized for reasons similar to the G20.
Garnishment
The practice of deducting money from a debtor’s income (typically
the salary), sometimes as a result of a court order. Wage
garnishment often continues until the full debt is paid off.
General purpose reloadable (GPR) card
A prepaid card set up with the user’s own funds, used in place of
a debit or credit card.
Gleaning
The act of gathering unharvested crops left behind by a landowner.
Historically, gleaning has at times been sanctioned or even
encouraged, at others forbidden or criminalized.
Global South
A term used to differentiate economically “developed” or rich
nations like the United States and those in Western Europe from
the “underdeveloped” or poor nations of Africa, Latin America, and
most of Asia.
Greenhouse gases
Gases most notably carbon dioxide, methane, and nitrous oxide that
trap heat in the earth’s atmosphere and affect changes in the
climate.
Guarantee agency
A company that insures private issuers of federal student loans.
Only loans issued prior to June 30, 2010, may be serviced by a
guarantee agency. On such loans, in the event of a default, the
guarantee company reimburses the private lender largely with funds
provided by the government and takes over the responsibility for
collection.
HIPAA (Health Insurance Portability and Accountability Act)
A U.S. law that protect patients’ privacy and requires providers
to notify patients if a breach has occurred.
Independent contractor
Someone who is self-employed and determines their own schedule and
mode of work. Examples include nurses, lawyers, barbers,
cabdrivers, and accountants.
Indigent
An individual without enough income to afford basic needs like
food, clothing, and shelter, or in a criminal case, someone who
cannot afford their own attorney.
Individual mandate
When an individual is required to obtain private health insurance
instead of, or in addition to, a national health insurance plan.
Individual Tax Identification Number (ITIN)
An IRS-issued, nine-digit number for taxpayers who are not
eligible for a Social Security number.
Insurance premium
The rate a patient pays for some portion of the expense of office
visits, including prescription medications, surgical procedures,
mental health services, ongoing treatment, and emergency services.
Interest
A fee for borrowing, calculated as a percentage of money owed.
Interest rate swap (IRS)
A financial tool engineered by Wall Street banks and marketed to
states, cities, and other issuers of municipal debt as a means of
converting variable interest payments to stable fixed rates. In
practice, swaps have locked many municipalities into artificially
high interest payments from which banks profit greatly.
International Monetary Fund (IMF)
An international organization with the mandate of expanding global
trade which, in coordination with the World Bank, issues loans to
countries in need under the guise of alleviating poverty, often
while imposing structural adjustment programs. According to the
IMF, it differs from the World Bank in that it is a “cooperative”
institution tasked with overseeing the balance of accounts between
countries. See World Bank and
structural adjustment programs (SAPs).
Jubilee
Historically, jubilee refers to the abolition of slavery, the
cancellation of all debt, and a return of all lands to the common.
In the late eighteenth century the term was used in the English
countryside to demand an end to enclosures while African slaves
used “jubilee” to demand liberation from slavery. The term was
used more recently in the alter-globalization movement in the
1990s to demand an end to third world debt and by debt resistance
groups after the financial crisis of 2008 to demand the
cancellation of household debt.
Legal Financial Obligations (LFOs)
Fines, fees, and other costs associated with a criminal sentence,
for example, supervision fees if on probation, administrative
fees, “pay to stay” fees, and prison fees.
Libor (London Interbank Offered Rate)
Benchmark used to set interest rates for over $800 trillion in
investments globally. Calculated daily based on data provided by
eighteen of the world’s largest banks. For several years following
the financial crisis of 2008, banks committed massive fraud by
reporting false data to intentionally manipulate interest rates
around the world.
Lien
In the event of non-payment, a lien is a creditor’s right to take
possession of and sell the debtor’s asset that was used to secure
a loan.
Means test
A set of criteria used to determine eligibility for financial
assistance or debt relief based on an individual’s perceived need.
Median wage
In a set of wages, the wage that falls between the highest-paid
50% of workers’ wages and above that of the lowest 50%.
Medicaid
A U.S. federal- and state-funded health insurance program
available only to specific low-income populations, including
children, pregnant women, and people living with disabilities.
Medical loss ratio
A term used by insurance companies to account for the money that
is actually spent on care instead of profits.
Medicare
A U.S. federal social insurance program funded largely by a
payroll tax on employers and workers, Medicare provides health
insurance for U.S. citizens 65 and older and others with
qualifying conditions.
Microcredit
A particular practice of lending where loans are not given to
isolated individuals, but to each person in a “solidarity group,”
often women, in order to finance a small business venture. The
members of the group are collectively responsible to make the
recipient pay the loan back to the bank. This use of social
pressure to achieve high payback rates has been justified as an
alternative to the usurious practices of moneylenders in poor
communities all over the world.
Microloans
See microcredit.
Military-industrial complex
A term used to describe the strong ideological and material
connections between a nation’s armed forces, elected officials,
and corporations. See prison-industrial complex.
Mini-Miranda
A legally required statement from a collector informing the lender
that they are collecting a debt and that any information gathered
during correspondence will be used to collect that debt.
Monetization
A process of converting something into legal tender, for example,
paper currency or coins.
Mortgage
An agreement in which a loan is obtained to buy property and in
which the lender may take ownership in the event that the
repayment does not occur according to the terms of the agreement.
Mortgage-backed security (MBS)
A tradable financial product whose value is based on the
likelihood of repayment on a mortgage or collection of mortgages.
Mortgage-modification
A process where the lender and borrower of a mortgage agree to
modify terms of the original agreement often in service of helping
the borrower avoid eviction and foreclosure.
Municipal bond
Bonds issued to raise funds by state and local governments or
publicly funded incorporated entities, such as school districts,
development corporations, transportation authorities, or public
utilities. Municipal bonds are explicitly or implicitly backed by
future tax revenue or other revenue streams such as tolls and
utility fees, and are often issued by government-formed
authorities run by unelected boards of directors.
Municipality
Any incorporated local governmental division, such as a county,
city, town, or village.
Mutual aid
A practice of freely sharing or lending resources or labor based
on the understanding that the betterment of a community member is
ultimately beneficial to all. It has been observed everywhere in
nature and throughout history.
National debt
Debt created by selling government bonds and securities to banks
and investors within the country issuing the bonds.
Negative equity
When the market value of an asset or investment falls below its
outstanding loan balance.
Neoliberalism
A form of capitalism that claims that what had previously been
done by the state or through cooperative social action would be
better done by capitalist firms competing in the marketplace. It
differs from “old” liberalism, which argued for tearing down
tariff barriers and other “hindrances to trade.” In neoliberalism,
commodification extends into realms that previously resisted it
such as the human parts market and whole new areas of property
such as the DNA of a species. Neoliberal economic policies
generally include the push for privatization of public services,
lower wages for the majority of workers, and loosening
restrictions on businesses. See capitalism.
Net worth
See wealth.
Odious debt
Debt imposed on a government that should never have been taken on
in the first place. Often incurred by undemocratic regimes in the
interest of those in power, it is the country’s population that is
held responsible for repayment, typically at the cost of great
suffering.
Offer in compromise
A way to settle one’s tax debts for less than what one owes, based
on ability to pay, income, expenses, and asset equity.
Original creditor (OC)
The company to which a debt was originally owed.
Participatory budgeting
A process by which community members work together to determine
priorities for public spending. Participatory budgeting has been
shown to result in a more equitable distribution of public
resources than budgets determined exclusively by representative
governments.
Pawnshop loan
When a borrower gives property to a pawnbroker to secure a small,
high-APR loan, generally for half of the item’s value.
Payday loan
Small-credit, high-APR loans deceptively marketed as a quick and
easy way to tide borrowers over until the next payday.
Poverty tax
The surcharge people pay for not having savings or access to prime
credit and are thus consigned to fringe finance.
Precarious labor
A trend in employment practices in which opportunities for
long-term stable jobs with benefits are scarce.
Predatory lending
The practice of deceiving borrowers into entering abusive or
unfair loan agreements.
Prison-industrial complex
A concept used to draw parallels with the military-industrial
complex, to highlight ways in which corporate profits incentivize
a rapidly increasing prisoner population. See
military-industrial complex.
Progressive taxation
A tax system where people with higher incomes have a higher tax
rate in order to better distribute wealth. See
regressive taxation.
Public banking
An alternative to standard state and local government banking and
financing models. State or municipal revenues are held in a
publicly owned an operated bank rather than a Wall Street
financial institution. Bank funds are used to finance
infrastructure, economic development and programs that provide
long-term returns and benefit the public good, allowing
governments to avoid the bond-financing trap. Bank dividends are
returned to the public treasury.
Redlining
A practice that makes loans or insurance inaccessible to people of
color, historically used to enhance segregation. See
reverse redlining.
Refund anticipation checks (RACs)
A financial product in which consumers who can’t afford tax
preparation costs agree to have a temporary bank account opened
where the IRS deposits their tax refund. When the refund is
deposited, the tax preparation company takes out the amount equal
to the cost of their services as well as burdensome fees.
Refund anticipation loans (RALs)
A financial product where consumers can receive the amount of
their tax refund in advance in the form of a short-term,
high-interest loan. This product has, as of 2013, been largely
replaced by refund anticipation checks. See
refund anticipation checks.
Regressive taxation
A tax system in which people with lower incomes bear a
disproportionately high tax burden. See
progressive taxation.
Remittance
A money transfer sent to an immigrant’s home country.
Rent-to-own lender
A store that rents appliances, electronics, and other items to
people which they can, in theory, eventually own. This is
different from credit purchases where the customer immediately
gains the title to the product.
Reproductive labor
Work done in and around the home, often without a wage, including
but not limited to childrearing, housework, and procreation;
traditionally done by women and unrecognized as “work.”
Reserve currency
The primary currency of exchange used by governments and
institutions in global trade. The U.S. dollar has been the reserve
currency for the past seven decades.
R
everse redlining
Aggressively targeting communities of color with predatory
services such as loans, insurance, for-profit education, etc. See
redlining.
Risk pooling
The subsidization of wealthy households’ credit cards.
Risk premium
The cost increase required to compensate for credit risk.
Robo-signing
When an employee, agent, or software of a mortgage servicing
company signs foreclosure documents without reviewing them, often
resulting in fraudulent or faulty agreements.
Sallie Mae (Student Loan Marketing Association)
Created as a government-sponsored enterprise in 1972, Sallie Mae’s
initial purpose was to issue federally guaranteed student loans,
financed by a mix of subsidies and private capital. Now it is a
publicly traded multibillion-dollar company that issues private
student loans and makes millions servicing loans originated by the
government.
Secondary market
A market where original investments (loans, mortgages, etc.) are
pooled or split in order to be traded to other investors. The New
York Stock Exchange and the NASDAQ are examples of secondary
markets.
Secured debt
A debt in which specified assets (collateral) become the property
of the lender in the event that the borrower cannot repay. See
unsecured debt.
Service economy
A range of jobs that produce intangible goods, for example,
retail, food, and education. Employees in this sector usually
require specialized skill sets and are paid low wages.
Single-payer health care
Health care in which a government pays for all expenses except
copays and coinsurance, rather than private insurance companies.
SLABS (Student Loan Asset-Backed Securities)
Tradable financial products whose value is based on the likelihood
of repayment on private student loans that are collected in a
pool.
Socialism
An economic system in which the bulk of the means of production
are held in common and production is democratically planned by the
producers.
Sovereign debt
Debt created by national governments borrowing from foreign
sources like the World Bank, the International Monetary Fund
(IMF), or nation-states like China.
Squatting
The common practice of taking up residence in an otherwise
unoccupied property and making it one’s home without permission
from the legally recognized property owner.
Stated income loan
A type of mortgage that allows the borrower to note their income
and assets on the loan application without verification.
Statute of limitations (SOL)
A legal limit on the number of years a creditor may attempt to
pursue payment.
Structural adjustment programs (SAPs)
Conditions set by the International Monetary Fund and World Bank
primarily for countries in the global South to repay debts or
apply for new loans.
Student loan deferment
An agreement between lender and financially distressed borrower to
postpone repayment for a defined period during which interest does
not accrue for subsidized loans.
Student loan forbearance
An agreement between a lender and a financially distressed
borrower to reduce or delay payments to avoid default. Interest
continues to accrue during this period.
Subprime
Loans that are characterized by high interest rates, designed for
“high-risk” borrowers due to their low credit scores, inadequate
documentation, or high debt loads.
Treasury notes
See Department of the Treasury.
Unbanked
People without checking or savings accounts.
Underbanked
People with checking or savings accounts but who at least
partially rely on alternative financial products.
Underwater home
A home in which the value of the mortgage is higher than the
home’s market value.
Unsecured debt
Money borrowed that is not backed by collateral. See
secured debt.
Upside-down car loan
A loan in which the purchaser owes more on a car than that car’s
current value.
Usury laws
Laws that establish legal maximum interest rates for loans
regulated by states to protect borrowers.
Wage stagnation
An economic trend in which average wages do not increase when
adjusted for inflation.
Wealth
The amount someone owns minus the amount that they owe. Also
referred to as net worth.
World Bank
An international organization with the mandate of expanding global
trade which, in coordination with the International Monetary Fund,
issues loans to countries in need under the guise of alleviating
poverty, often while imposing structural adjustment programs. See
International Monetary Fund (IMF) and
structural adjustment programs (SAPs).
A Project of Strike Debt