Money Terms and Definitions

ARREARS

Being behind in required payments or owing more than the agreed limit for a loan or rental agreement.

BANKRUPTCY

A legal process for people unable to pay outstanding debts, where certain assets can be sold off by an administrator to pay money owed and many outstanding debts can be written off.

CREDITOR

Somebody who is owed money or a payment (a lender).

DEBTOR

Somebody in debt or owing money (a borrower).

DEFAULT

Default is when a borrower or customer fails to make the required payments on a loan. The bank or lender can then take steps to recover the money owing. This may involve legal action for debt collection.

GUARANTEE

A promise to repay somebody else's loan or debt.

GUARANTOR

Somebody who offers to guarantee another person's loan. They promise to pay the loan back if the borrower does not.

HARDSHIP ASSISTANCE

Steps by which a loan or bill payment might be varied (such as term or due date extended, amount owing/payments reduced, deferred or waived) to assist customers in financial difficulty.

INTEREST RATE

The charge or fee for lending money. When borrowing, interest is the extra you must pay back on top of the original amount borrowed. It is calculated as a percentage or proportion of the amount borrowed, usually calculated per year but sometimes per month or per week.

JUDGEMENT

An amount owed for a debt as determined by a court. It allows a lender to take steps to recover money owed from income or assets or proceed to bankrupt the borrower.

MORTGAGE

A loan where your asset is secured by the bank so they can sell it in case the loan is not repaid and get their money back from the sale proceeds.

REPOSSESSION

If a loan can't be repaid or is in default, the lender may take legal action to take back a secured asset.