A debt that is so delinquent that the lender considers it a total loss. To recoup what they can, creditors will normally sell these accounts to collection companies for pennies on the dollar. The collection company is then entitled to the entire balance owed on these accounts and will aggressively try to collect on the debt. It is important to note that the borrower is still legally obligated to pay the debt even if the creditor has considered the account a total loss.

A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest.

A Bankruptcy is an official legal declaration that one is unable to pay their debts, and under the law is seeking legal protection from creditors. There are different types of Bankruptcy protection agreements, the most common of which are called Chapter 7 and Chapter 13.
Chapter 7 is a bankruptcy is one in which the debtor declares total financial insolvency and all their assets are liquidated, paying off creditors whatever is collected from the sales. Any remaining debts are then dissolved. A Chapter 7 bankruptcy will typically stay on the debtor’s credit report for 10 years.
Chapter 13 is a bankruptcy in which the debtor will negotiate with his creditors new repayment terms for debts owed, allowing him to keep all his existing assets. A Chapter 14 bankruptcy will typically stay on the debtor’s credit report for 7 years.

A final payment at the end of a loan term that is considerably larger than the regular periodic payments.

The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently.

A loan calculated so that all the finance charges and other creditor expenses are deducted before the consumer receives the principal.