Balance Transfer
Process of moving an unpaid credit card debt from one credit card issuer to another.

Daily Periodic Rate
The interest rate factor used to calculate interest charges on a daily basis. The factor equals the annual percentage rate divided by 365. See periodic rate.

Debit Card
A bankcard with direct access to a cardholder's account, usually a checking or savings account. The card acts like a check, with the money withdrawn from the existing account balance.

Debt
An amount of money that a consumer owes to one person or firm.

Debt Service
The sum of monthly payments required on credit cards, installment loans, home equity loans, and other debts, but not including payments on the loan applied for.

Debtor
A person who is liable to another for money.

Debt-to-Income Ratio
A measure of creditworthiness that calculates your debts as a percentage of income, and is calculated by dividing the total of your long-term debt payments by your gross income.

Deductible
Under an insurance policy, the amount of loss or expense for which the insured is responsible before the insurance company begins paying.

Deed
A legal document that presents title to real property.

Deed in Lieu (of Foreclosure)
When a homeowner can't make the mortgage payments and can't find a buyer for the house, the lender may accept ownership of the property in place of the money owed on the mortgage.

Default
When a debtor fails to make payments within a specific period of time ruled by the original contract.

Defendant
A person charged in a legal action.

Deferred Annuity
An annuity that delays payments until the holder elects to receive them.

Defined Benefit Plan
A traditional pension plan, which pays retirees a fixed monthly amount based on length of service, salary, and age.

Defined Contribution Plan
An employer-sponsored retirement plan in which contributions are fixed on an annual or periodic basis. Benefits provided to participants are determined solely by the return on investment.

Deflation
A decrease in the prices of goods and services.

Delinquency
Failure to make payments when they are due. In most mortgages, payments are due on the first day of the month. Even though, they may not charge a late fee for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more or the credit bureaus.

Depreciation
Decrease in the value of an asset over time.

Derivatives
Financial instruments with returns that move in response to some underlying asset or directory.

Digital Certificate
A digital certificate is an electronic document, which confirms the identity of the owner of a public key.

Disability Insurance
Insurance that replaces your income if you're unable to work for an extended period due to illness or injury.

Discharge of Debts
The legal term for the order to eliminate a debt through a bankruptcy case. A bankruptcy court's erasure of the debts of a person or business that has filed for bankruptcy.

Dischargeable Debts
Debts that can be eliminated in bankruptcy. Most debts incurred prior to declaring bankruptcy are dischargeable, including back rent, credit card bills, and medical bills. Certain debts are not dischargeable and may not be eliminated through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts that cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13.

Discount
The degree to which the price of an asset is lower than its face value.

Discount Bond
A type of bond that is sold for less than face value. The difference between the purchase price and the face value is the interest received by the investor.

Diversification
The distribution of investment dollars among a variety of different assets or securities in a portfolio to lower the potential risk or adverse impact of any single assets poor functioning.

Dividends
Payment made by a company to its stockholders that is usually a portion of profits.

Dollar Cost Averaging
Investing a fixed sum at regular intervals, regardless of the share price, to reduce timing risk.

Dow Jones Industrial Average
Widely quoted stock index composed of 30 blue-chip stocks. The value of this index, which does not include dividends, is calculated daily.

Down Payment
The portion of the purchase price usually paid immediately upon purchase, in the form of cash or trade-in value.

Durable Power of Attorney
A legal document that allows someone to appoint an attorney in fact to conduct personal and financial business, even in the event of legal incompetence. It expires upon the giver's death.

Earnest Money
A deposit paid up front as part of a purchase price, to reveal good faith on the part of the buyer.

Electronic Fund Transfer (EFT) Systems
A variety of systems and technologies for transferring funds electronically rather than by check.

Endorsement
A provision added to an insurance policy to add to or alter the existing coverage. May be referred to as a rider.

Equity
Ownership interest in an asset. Equity is the difference between the value of the property and the amount still owed on its mortgage and other liens. Also, a security that is based on an ownership interest.

Escrow
When a neutral third party holds documents, money, or other property until agreed upon conditions are fulfilled.

Estate
All property owned by an individual at death.

Estate Planning
Arranging to make sure your assets pass in an orderly and efficient manner to those who you want to have them after your death.

Estate Taxes
Taxes by federal and state governments on the transfer of your assets after you die.

Executor
A person named in a will to oversee the distribution of an estate.

Exempt
Property that is removed from the bankruptcy estate and is not available to pay creditors' claims. The debtor picks the property to be exempted from the statutory lists of exemptions available under his state's laws. The debtor may keep exempt property to make a fresh start after bankruptcy.

Exemptions
The lists of the types and values of property that is legally unreachable to creditors or the bankruptcy trustee. Property exempted is determined by state and federal rulings, and varies from state to state.

F

Fair Market Value
The highest price a buyer, willing but not forced to buy, would pay, and the lowest a seller, willing, but not forced to sell, would accept. In a foreclosure a borrower in default under a mortgage is left without his or her interest in the mortgaged property. This involves a forced sale of the property at a public auction with the proceeds of the sale applied to the mortgage debt.

Federal Deposit Insurance Corporation (FDIC)
An agency created by the federal government that protects depositors against losses from the financial closure of a bank.

Federal Insurance Contributions Act (FICA)
Law that orders employers to withhold Social Security and Medicare taxes from wages.

Federal Reserve System
The nation's central banking system, put together by Congress to help provide the United States with a safe and stable monetary and financial system. It regulates U.S. monetary policy, and has the power to influence key, short-term interest rates, and control the amount of money and credit flowing through the U.S. economy

FHA Mortgage
A mortgage on which the Federal Housing Administration insures the lender against loss. The borrower pays the mortgage insurance premium.

Fiduciary
A person entrusted with duties on behalf of another. The law mandates the highest level of good faith, loyalty, and thoroughness of a fiduciary, more than the common duty of care that will all regularly give one another. The debtor is possession in a Chapter 11 is a fiduciary for the creditors, owing loyalty to the creditors and not the shareholders of the debtor.

Finance Charge
The cost for using credit, put together with interest costs and other fees.

Finance Company
A business that makes consumer loans. The interest rates charged by a finance company may be higher than those charged by other creditors, and credit criteria may be more relaxed, allowing those with problem credit to qualify.

Financial Planner
A financial adviser, ideally with broad knowledge of all areas of personal finance. Fee-only planners are paid solely by their clients—that is, they do not receive sales commissions or other compensation from other sources. Fee-plus-commission planners charge fees for advice and other services, and also on the sale of investment and insurance products. See certified financial planner.

First Mortgage
The first-priority claim against real property in the event the borrower defaults on the loan.

Fixed Annuity
Guaranteed payments fixed over the life of the annuity.

Fixed Rate Mortgage
A mortgage on which the interest rate is specified in the loan contract, and remains unchanged throughout the term of the mortgage loan.

Flexible Spending Account
An employer-sponsored benefit that allows employees to have pretax dollars withheld from their salaries to pay for medical expenses that are not reimbursed by employers and dependent-care expenses, such as babysitting or eldercare fees.

Float
In a mortgage transaction, the option which the borrower may exercise to allow the rate and points to vary with changes in market conditions, rather than to "lock in" those prevailing at that time. Also, in securities, the number of shares outstanding and available for trading. In banking, the time between deposit and payment of checks. In credit, the time between a charge purchase and the date on which payment is due.

Forbearance
Voluntarily holding back from doing something, such as defending a legal right. For example, a creditor may forbear on its right to collect a debt by temporarily postponing or reducing the borrower's payments.

Foreclosure
A legal action taken to terminate a homeowner’s right and interest in a property so that the property may be sold to pay off debt.

401(k) Plan
A contribution plan for employees as offered by their employers. (Not all employers offer such plans). You may contribute to a maximum amount as determined by the government. Some employers match contributions to a certain dollar amount or percentage.

Fraud
A dishonest and unlawful practice.

Full Faith and Credit
An unconditional commitment to pay interest and principal on debt; usually issued or guaranteed by the U.S. Treasury.

G

Garnishment
A court-ordered debt collection in which a portion of a person's salary is paid to the creditor. The process by which a judgment creditor seizes money, which is owed to his judgment debtor, from a third party, called a garnishee.

General Unsecured Claim
A creditor's claim without a priority for payment for which the creditor doesn't hold a security or collateral. If the available funds in the estate continue beyond payment of unsecured claims, the claims are paid in proportion to the size of the claim relative to the total of claims in unsecured claims.

Gold Card
A credit card that offers a bigger line of credit, generally $5,000 and up, than a standard card. Income requirements are higher, usually a $35,000 minimum. In addition, issuers provide extra perks or incentives to cardholders.

Good Faith Estimate
An initial estimate of the fees associated with closing a loan that is given to you within three business days of turning in a loan application.

Government Bond
A bond issued by the U. S. government.

Grace Period
This is the length of time between the date of the credit card purchase and the date the company starts charging you interest.

Graduated Payment Mortgage (GPM)
A type of mortgage that allows for a lower initial payment that goes up over time, and then levels off. The difference between the lower initial payment and the required payment is added to the unpaid principal balance, and referred as negative amortization

Gross Income
Salary and wages before income taxes are deducted.

Growth Fund
A mutual fund that invests primarily in stocks for capital appreciation, as opposed to current income.

Growth Stock
Stock of a company with a record of high and vast earnings growth, relative to its industry.

Guarantee
A promise by one party to pay a debt or perform an obligation if the person with primary liability fails to pay or perform, as required.

Guardian
The person legally designated as responsible for the minor children and/or personal property of another person.

H

Hazard Insurance
A type of insurance shielding a policyholder against property damages caused by fire or a severe storm.

Heir
A beneficiary in a will.

Home Equity Line of Credit
A type of mortgage loan that provides the ability to access funds at any time and any amount, up to the maximum credit limit or line. Repayment is secured by a second mortgage, and is based on the equity in your home. Specified interest paid is usually tax deductible. Often used for home improvements, major purchases or expenses, and debt consolidation.

Home Equity Loan
A fully funded loan, acquired for a variety of purposes, secured by a second mortgage and based on the equity in your home. Interest paid is usually tax deductible.

Home Inspection
When a professional inspects the condition of the structure, electrical and plumbing systems, and other mechanical systems during a home purchase.

Homeowner's Insurance
An insurance policy that covers a homeowner against damages to property. It also includes liability protection for lawsuits from people injured while on the premises.

Household Income
The total income of all members of a household, used by creditors when evaluating applications for joint credit.

HUD-1 Statement
An itemized listing of the costs connected with a real estate transaction, including commissions, loan fees, points, and escrow amounts. The amount of costs paid by the buyer and seller are listed, and the seller's net proceeds are disclosed. Also called settlement sheet.

I

Immediate Payment Annuity
An annuity purchased with one payment. Payments begin immediately.

Impound Account
Portion of the borrower's monthly mortgage payment that is held by the lender to pay property taxes, hazard insurance, mortgage insurance, ground rent, and other items as they become due. Known as an escrow account.

Income Fund
A mutual fund that seeks current income, rather than capital growth.

Index
A published, market-based figure used to set up a lending rate. Common indices include the one-year Treasury Constant Maturity Yield, the Federal Home Loan Bank (FHLB) 11th District Cost of Funds, and the prime rate, as listed in The Wall Street Journal.

Index Fund
A type of mutual fund that mirrors a broad-based index, such as the S&P (Standard & Poor's) 500 stock index. Because they are not actively managed, these funds usually have low management fees.

Indexed Rate
The sum of the published index, plus the margin, in an adjustable rate mortgage.

Individual Retirement Account (IRA)
An account to which an individual may contribute up to $3,000 per year (for the year 2004, although amount to vary from time to time). The contributions are tax-deductible and the earnings are tax-free until withdrawn.

Individual Retirement Account Rollover
The movement of qualified retirement funds from one account to another in order to avoid taxability and penalty. The rollover must occur within 60 days into an IRA-qualified retirement account.

Inflation
An increase in the prices of goods and services, shown as an annual percentage increase in the Consumer Price Index, as compiled by the Department of Labor.

Installment Loan / Installment Credit
An account in which the debt is divided into amounts to be paid consecutively at intervals set by the terms of the loan.

Initial Public Offering (IPO)
The first time the stock of a corporation is available for purchase by the public.

Interest
The cost of borrowing money. Also, the earnings on invested money.

Interest Rate
The fee charged or paid for money lent, expressed as a percentage of the principal.

International Fund
A mutual fund that invests in foreign securities.

In Testate
To die without a will.

Introductory Rate
A low rate charged by a lender for an initial period to encourage borrowers to accept the credit terms. After the introductory period is over, the rate charged increases to the indexed rate or the stated interest rate. Often called a teaser rate.

Investment
An asset or item of value that is purchased to make a profit in the future.

Investor
A person who makes investments.

Itemized Deductions
The items that may be subtracted from adjusted gross income in lieu of the standard deduction to reduce taxable income. Examples of itemized deductions include state and local tax payments, gifts to charity, and certain amounts of home mortgage interest.

J

Joint Credit
Any account owned by two or more people where all parties are responsible for repaying the debt.

Joint Tenancy
When two or more people own property and each tenant has an equal interest and equal rights to the property. If one party dies, ownership is passed to the remaining owner, which is referred to as the right of survivorship.

Judgment
A court verdict that requires a person to do a task, such as paying a debt.

K

Keogh Plan
A tax-deferred retirement plan for small business owners or self-employed people who have earned income from their trade or business. Contributions to a Keogh plan are tax deductible.

L

Late Payment Fee
Fee charged to a consumer whose monthly payment has not been received by the due date or stated deadline for payment, as shown on the billing statement.

Lease
A contract that allows you to use or occupy property (such as a car, an apartment or a computer) for a set period of time, during which you make monthly payments.

Lessee
The person leasing the automobile or apartment.

Lessor
The leasing company, bank or finance company that purchases the car from the dealer and leases it to you. In apartment rental agreement, the lessor is the landlord.

Lender
A person, company or entity that loans money for the purchase of real estate.

Liability
A financial obligation.

Liability Insurance
Insurance coverage that protects you against injuries you cause to other people, or damage you cause to their property.

Lien
There are numerous kinds of liens. These are encumbrances that is “burdens” placed on property for e.g. unpaid taxes, mortgages, mechanic's etc. A lien must be recorded with the local county government to attach to the property. When the property is sold, the liens are honored.

Life Expectancy
The age to which half of the people in an age group are expected to live.

Liquidated
A debt that is for a recognized amount of money is liquidated. A debt that is not liquidated is one where the debtor has liability, but the exact monetary measure of the liability is unknown.

Liquidity
A measure of the ease with which an asset can be converted to cash without the loss of principal.

Living Will
A legal document that articulates your medical decisions if you are unable to speak for yourself as a result of medical inability.

Load
The sales commission charged when you buy or sell shares from a mutual fund.

Load Fund
A mutual fund that carries a sales charge.

Loan
An amount of money that is loaned to a borrower who agrees to repay the loan amount plus interest.

Loan Commitment
A written agreement between a lender and borrower to loan money at a future date, subject to the specified terms and conditions.

Loan-to-Value Ratio (LTV)
A ratio expressed as a percentage, calculated by dividing the loan amount by the sales price or appraised value, expressed as a percentage.

Lock In
The lender promises to loan a specific amount at a specific interest rate if the loan is closed by a specific date. The lock lasts for a certain time period.

Long-Term Care Insurance
Insurance that provides some coverage for nursing home stays, and home health care for people with disabling conditions.

M

Margin
In an adjustable rate mortgage, the amount added to the interest rate index, to compute the new indexed interest rate. Also, borrowing money from a broker to purchase securities.

Market Timing
Shifting money in and out of investment markets in an effort to take advantage of rising prices and avoid downturns.

Market Value
The price at which buyers are willing to buy and sellers are willing to sell.

Maturity
The date a debt is due for payment.

Medicaid
The government program that provides health care assistance for the poor.

Medicare
The government program that provides health care assistance for older and disabled people.

Minimum Payment
The minimum amount, usually 2-3 percent of the outstanding balance, a cardholder can pay to keep a credit card account from going into default.

Money Market Account
A federally insured, demand account available through banks, credit unions, and savings and loan associations. Not to be confused with a money market mutual fund, which is not insured.

Money Market Mutual Fund
A type of mutual fund that invests in secure, short-term securities. These funds are designed to be easily convertible into cash, and are structured to maintain an unchanging value of $1 a share. Only the yield is supposed to vary.

Monthly Periodic Rate
The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the annual percentage rate divided by 12. See periodic rate.

Mortgage
A document granting a lien on a home in exchange for financing granted by a lender. The mortgage secures the loan and the ability to foreclose on the home.

Mortgage Insurance
Insurance that protects the lender against loss in the event a mortgage borrower defaults. Also called private mortgage insurance.

Municipal Bond
A bond issued by a state or a political subdivision, such as a county, city, town, or village. The term also assigns bonds issued by state agencies and authorities. Interest payments from municipal bonds are generally free from federal income taxation.

Mutual Fund
A mutual fund is a pool of money handled by an investment company, which raises money from shareholders and invests in stocks, bonds, options, commodities, or money market securities. A mutual fund offers the advantages of diversification and professional management, for which the investment company charges a fee.

N

NASDAQ
The National Association of Securities Dealers Automated Quotation System. As the over-the-counter market, the NASDAQ is a computer-based, securities exchange that does not have a physical trading location. Transactions are carried out via telephone and computer networks.

Negative Amortization
An increase in a mortgage loan balance that occurs when the monthly payment is too small to cover the principal and interest due. The amount of the shortfall is added to the remaining balance to be repaid later. See graduated payment mortgage.

Negotiable Instrument
A written document which is an unconditional promise to pay a specified amount of money upon the demand of its owner. Examples may be checks and promissory notes. Negotiable instruments can be transferred from one person to another, as when you write "pay to the order of" on the back of a check and turn it over to someone else.

Net Worth
The difference between a person's assets and liabilities.

No Asset Case
A debt that cannot be eliminated in bankruptcy. Non-dischargeable debts remain legally enforceable despite the bankruptcy discharge.

No Load Fund
A mutual fund that doesn't have sales commission.

Non-Dischargeable Debts
A Chapter 7 case in which the trustee determines that there are no significant assets to liquidate. The debtor retains all of their real and personal property. Debts that cannot be dismissed through bankruptcy. Examples are alimony, child support, many student loans, and most income tax debts. Compare to dischargeable debts.

Non-Profit Corporation
A business entity formed for civil, social, or charitable purposes for which the generation of profit is not part of its function. Non-profit corporations are taxed differently, and are incorporated differently than for-profit business organizations.

O

Open-End Credit
A line of credit that may be used over and over again, including credit cards, overdraft credit accounts, and home equity lines.

Origination Fee
A loan-processing fee paid to the lender as a percentage of the loan amount, where one percent equals one point.

Outsource
To hire another company or contractor to perform a service or function.

Overdraft Checking
A checking account with a line of credit that allows the borrower to write checks or draw funds for more than the actual account balance.

Over-the-Limit Fee
A fee charged for going above the credit limit on a credit card.

P

Perfection
When a secured creditor has taken the necessary steps to perfect his lien. This lien comes before any liens that arise after perfection. A mortgage is perfected when it is recorded with the county recorder. A lien in personal property is perfected when filing a financing statement with the secretary of state.

Penalty Rate
Several percentage points higher than a credit card's current annual percentage rate, which goes into effect after a predetermined number of late payments.

Periodic Rate
The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month. The daily periodic rate is the cost of credit per day.

Personal Identification Number (PIN)
A personal code used to access bank or credit card accounts at ATM's or point-of-sale locations.

Personal Loan
A loan secured by property other than real estate, or unsecured.

Personal Property
Property that is not real property or affixed to real property, such as cars, stock, furniture, etc.

Petition
A document the opens a bankruptcy case. The filing of this petition comprises an order for relief.

PITI
Shorthand for principal, interest, taxes, and insurance, which are the parts of a monthly mortgage payment.

Platinum Card
A credit card with a higher limit and more benefits than a gold card.

Plaintiff
The person who institutes a suit in a court.

Points
A point is one percent of the loan amount.

Policyholder
A policyholder is a person who pays a premium to an insurance company in exchange for the protection detailed in an insurance policy.

Portfolio
The securities or investments owned by an individual.

Power of Attorney
The legal authority given to a person to act on behalf of another.

Pre-Approval
A process used to assess a prospective borrower's ability to pay back a loan. It determines how much money a prospective homebuyer can borrow before an actual application is made.

Preference
A transfer to a creditor while paying an existing debt made during a specific time periods before the beginning of a case. The trustee may recover preferences to benefit creditors of the estate.

Preferred Stock
A stock that pays dividends at a set rate, and is given preference in relation to the payment of dividends and the distribution of corporate assets in the event of liquidation. Preferred stock generally does not have voting rights.

Premium
The fee you pay for insurance, usually a recurring expense paid at fixed periods.

Prepayment Penalty
A charge imposed by the lender if a borrower pays off a loan early. The charge is usually expressed as a percent of the loan balance at the time of the prepayment.

Pre-petition
Claims or events that arise before the beginning of the bankruptcy case, and before the filing of the bankruptcy petition. Usually, only pre-petition debts may be discharged in a bankruptcy proceeding.

Prequalification
A process used to assess a prospective borrower's ability to pay back a loan. It determines how much money a prospective homebuyer can borrow before an actual application is made.

Previous Balance
An interest calculation method used by some credit card issuers where finance charges are based on the amount owed at the end of the previous billing cycle.

Price Earnings (P/E) Ratio
A common method used to measure the expense of a stock. The stock price is divided by earnings per share, for a 12-month period to compute P/E.

Prime Rate
The interest rate banks use to price loans to their best or "prime" customers. Many institutions quote prime rates established by large money center commercial banks, such as Citibank or Chase Manhattan. There is also a prime rate average listed in The Wall Street Journal that is an average of the largest commercial banks.

Principal
The original or remaining amount of money invested or lent out, not including profits or interest earned or due on that money.

Priority
The order in which claims are paid from the bankruptcy estate during a bankruptcy filing. All claims in a higher priority must be paid in full before claims with a lower priority receive any payment. All claims with the same priority share pro rata.
Claims are usually paid in this order cost of administration, priority claims, and general unsecured claims. Secured claims are paid from the proceeds of liquidating the collateral, which secured the claim.

Priority Claims
Specific debts, such as unpaid wages, spousal or child support, and taxes are bumped up in the payment hierarchy under Bankruptcy Code. Priority claims must be paid in full before general unsecured claims are paid.

Private Label Charge Cards
A private label charge card is issued by a retail outlet, such as a department store or gasoline company, and contains the logo of the retailer. Only the retailer who set it up accepts it.

Probate
The process of distributing a deceased person's estate.

Profit Sharing Plan
A compensation plan funded by employer contributions, based on a share of the company's profits. Compensation can be in the form of stocks, bonds or cash, and can be immediate or deferred to a future date.

Property of the Estate
The property that is not exempt and belongs to the bankruptcy estate. The trustee usually sells it and the claims of creditors are then paid from the proceeds.

Proof of Claim
Document a creditor files that shows how much money the debtor owes to them, together with all the supporting evidence of such a claim. There is generally a deadline in which to file a proof of claim.

Public Offering
When a corporation sells stock to the public.

Put
An option that grants its owner the right to sell a specified amount of a security or commodity at a specified price within a specified time. The opposite of a call.

Q

Qualified Retirement Plan
A retirement plan that meets certain IRS regulations and is eligible for tax deferment and in certain cases tax deductible.

Qualifying Ratios
The ratio of your fixed monthly expenses to your gross monthly income, used to determine how much you could afford to borrow. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans, or credit card payments, which is divided by your gross monthly income.

R

Reaffirm
The debtor has the choice to reaffirm debts that would otherwise be discharged by the bankruptcy. Usually, if a debt is reaffirmed, the parties have the same rights and liabilities that each had prior to the bankruptcy filing. The debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn't pay.

Real Estate Investment Trust (REIT)
A corporation or trust that uses money from many investors to purchase and manage property for the purpose of making money. REITS are frequently publicly owned.

Real Property
Another term for real estate. It includes land and things permanently attached to the land, such as trees, buildings, and stationary mobile homes. Anything that is not real property is termed personal property.

Rebate Card
A credit card that allows the customer to accumulate cash, merchandise, or services based on charges.

Refinancing
Paying off one loan with the profits from another loan.

Relief from Stay
A creditor has permission to ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. If this is granted, the moving party (but no one else) is free to take whatever action the court allows. Relief can be unconditional, allowing the creditor to foreclose on property, or limited, allowing the recordation of a notice or default.

Replacement Cost Coverage
Homeowner's insurance that pays the cost to replace or repair the insured home or possessions, up to the policy's set maximum. Provides more protection than actual cash value coverage.

Repossession
When in default, the creditor may take the collateral by self-help (depending on state law) or with the aid of a court order, dispose of the collateral by public or private foreclosure sale. They may retain the collateral to satisfy the debt, terminate the debtor's right of redemption, add the costs of repossession and the foreclosure to the unpaid balance of the debt, and go after the debtor for any remaining unpaid balance or deficiency.

Return on Investment (ROI)
A measure of a corporation's profitability; generally, the income an investment provides in a year. Also called total return.

Reverse Mortgage
An equity loan that allows a homeowner to receive tax-free payments on a monthly basis up to the credit limit, which is based on equity in the home.

Revolving Line of Credit
An agreement to lend a specific amount to a borrower, and to allow that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.

Rider
A provision added to an insurance policy to add, or amend the original coverage.

Risk
The degree of uncertainty regarding the rate of return on and/or the principal value of an investment.

Roth IRA
A tax-deferred retirement account. Contributions to a Roth IRA are not tax deductible, but there is no tax charged on withdrawals as long as the taxpayer is age 59 ½ and the account has been open for five years.

S

Schedules
The debtor must file the required list of assets and liabilities to begin a bankruptcy case, called the schedules.

Second Mortgage
The second-priority assertion against a property in the event that the borrower defaults on the loan. A riskier type of lending, since the lender who holds the second mortgage gets paid only after the lender holding the first mortgage is paid.

Sector Fund
This type of mutual fund invests in a specific industry, such as health care or technology.

Secured Card
A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. Mostly new credit users, or those attempting to fix a bad credit history use this type of card.

Secured Debt
A debt on which collateral has been guaranteed by the borrower. The creditor can introduce a foreclosure or repossession, or take the property identified by the lien, called the collateral, to satisfy the debt if you default. Compare to unsecured debt.

Securities
Stocks, bonds, or other types of investments that represent equity ownership or a debt obligation of an organization.

Securities and Exchange Commission (SEC)
The federal government agency that enforces federal securities laws.

Securities Investor Protection Corporation (SIPC)
An agency created by the federal government that protects investors against losses from the failure of a brokerage firm. It does not protect investors against losses arising from fluctuating securities prices.

Servicing
The management of mortgage loans between the time of loan disbursement and the time the loan is fully paid off. This includes collecting monthly payments from the borrower, maintaining records of loan progress, assuring payments of taxes and insurance, and pursuing negligent accounts.

Settlement
The process of finalizing the sale of property, including the transfer of the title from the seller to the buyer. Also called closing.

SIMPLE IRA
A Savings Incentive Match Plan for Employees (SIMPLE) IRA is a tax-deferred retirement plan that may be used by a sole proprietor, or offered by a small business that doesn't contribute to any other retirement plan.

Simplified Employee Pension (SEP)
This type of pension allows you to make contributions to your own retirement plan, if you're self-employed, and to your employees' plan.

Social Security
A U.S. government program that provides monetary assistance to the unemployed, disabled, or aged, which is financed by the taxation of workers and employers. It includes retirement insurance, disability insurance, and supplemental security insurance.

Spread
The difference between the bid price and the asked price of a security or commodity.

Standard & Poor's 500 Composite Stock Price Index (S&P 500)
An index is a group of investments that can be used as a yardstick to measure other similar investments. The S&P 500 is an index of 500 stocks. It is often used as a standard measure in assessing the performance of large company stocks.

Standard Card
The basic credit card offered by issuers.

Standard Deduction
The fixed amount you can deduct from your taxable income if you do not itemize your deductions. About 70% of all individual income tax returns use the standard deductions.

Stock
An equity security that indicates ownership interest in a corporation. Holders of stock may have certain rights, including the right to receive dividends and the right to elect members to the board of directors of the corporation. See common stock, preferred stock.

Stock Certificate
A document that provides physical evidence of stock ownership.

Stock Dividend
A dividend paid in stock rather than cash. The dividend may be additional shares of the issuing company, or shares of another company (usually a subsidiary) held by the issuing company.

Stock Fund
A mutual fund that invests primarily in stocks.

Stock Split
A division of the outstanding shares of a corporation into a larger number of shares. The number of shares increases, but the total value stays the same.

Strike Price
In an option contract, the stated price the holder can either buy or sell upon exercise of the option.

Surrender Value
The amount of money a policyholder would receive after canceling a life insurance policy.

T

Tax Bracket
A range of income, which must pay a certain level of taxes. The higher your income, the higher your tax bracket, and the more taxes you pay.

Tax Deferred
An asset with earnings and/or contributions that are taxed at a later date.

Tax Free
Investments whose earnings are never taxed. For example, municipal bond fund dividends are never taxed at the federal level. However, you may still have to pay capital gains taxes if you sell them with a profit.

Teaser Rate
The low rate charged by a lender for an initial period to encourage borrowers to accept the credit terms. After the introductory period is over, the rate charged increases to the indexed rate or the stated interest rate. Also known as an intro rate.

Tenancy by the Entirety
Joint ownership of a property by husband and wife. Ownership is passed to the surviving spouse, also called the right of survivorship.

Tenancy in Common
Co-ownership of a property by two or more people where each tenant has an equal interest and equal rights to the property. If one party dies, ownership can be passed to the remaining owner(s) via inheritance.

Term
The length of your mortgage or car lease.

Term Life Insurance
Life insurance that covers you for a preset period of time.

Thrift
Another name for a savings & loan.

Titanium Card
A credit card with an even higher limit than a platinum card.

Title
Indicates ownership of a particular piece of property.

Title Insurance
Insurance that protects the lender and the property owner against losses resulting from defects or problems with the title to the property.

Title Search
An inspection of the title records to make certain that the seller is the legal owner of a property, and that there are no liens or other claims pending against the property.

Total Debt Ratio
Total monthly debt plus housing payments divided by your gross monthly income. Also called Obligations-to-Income Ratio or Back-End Ratio.

Total Return
A security's total return reproduces not only the income that it pays out from interest or dividends, but also any changes in its share price or principal value.

Trade-In Value
The sum a dealership will credit you for a vehicle you provide as partial or full payment for another vehicle.

Transaction Date
The date goods and services are purchased, or the date a cash advance is made.

Treasury Bill
A fixed-income security originated by the U.S. government having a maturity of less than one year at issue. It is backed by the government's full faith and credit (unconditional commitment to pay).

Treasury Bond
Fixed-income security issued by the U.S. government having a maturity of more than 10 years at issue. Backed by the government's full faith and credit (unconditional commitment to pay).

Treasury Note
Fixed-income security issued by the U.S. Government having a maturity of one to ten years at origination. Backed by the government's full faith and credit (unconditional commitment to pay).

Trustee
An individual or corporation that is given legal responsibility to manage assets in the best interest of, or for, the benefit of another.

Two-Cycle Billing
With the two-cycle method, the average daily balance is calculated from two billing cycles rather than one, and finance charges are generally higher. This method wipes out the grace period for customers who carry a balance. If the bill is not paid in full at the first billing, interest becomes retroactive going back to the purchase date.

U

Umbrella Liability Coverage
Additional liability insurance that provides increased protection against lawsuits or other losses for which you are legally responsible.

Underwriting
The process of verifying data and approving a loan.

Unearned Income
Income derived from investments and other sources not connected to employment.

Universal Life Insurance
A cash value life insurance policy that provides life insurance protection and a savings component, with a guaranteed rate of return.

Unsecured Debt
Debt, such as most credit cards or medical bills, that is not secured with collateral or if you have just promised to pay a creditor an amount of money at a specific time. Most consumer debts are unsecured.

Unsecured Loan
A loan base on your promise to pay without savings or other collateral as a guarantee. Sometimes considered a signature loan.

V

VA Mortgage
A mortgage, of which only Veteran's are eligible, where the lender receives a guarantee to reduce loss from the Veteran's Administration (VA). The benefit of a VA mortgage is that the required down payment is very low, and maximum allowable loan amounts are higher than on FHA loans.

Variable Annuity
Payment amounts are not definite, but are based on the performance of the investment.

Variable Interest Rate
An interest rate that goes up or down on a set schedule based on an economic index such as the prime rate.

Variable Life Insurance
This type of insurance provides coverage for your entire life and builds up savings over time. You can invest your savings in a variety of mutual funds, which generally are managed by the insurance company.

Vest
A term mainly used to explain employee stock ownership, option programs and employer-matched retirement plans. In order to be fully entitled, the employee must stay associated with the firm for a certain number of years. Some vesting periods allow for full benefits after you work for them for a pre-defined number of years. Others gradually increase the benefits ("percentage of vesting") you receive, up to 100% as you work more and more years.

W

Whole Life Insurance
A life insurance policy that remains in operation for your entire life.

Will
A legal document that discusses how assets will be distributed upon death.

Workers Compensation
Employer-paid insurance required by law that compensates employees who are wounded on the job.

X, Y, & Z

Yield
The rate of profit on an investment, usually shown as a percentage rate. It doesn't include capital gains or losses.