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The short answer
Similar-sounding terms can describe different events: charge-off is not forgiveness, a settlement is not automatically a completed payment, and a reporting period is not a lawsuit deadline.
A practical debt glossary
| Term | Meaning |
|---|---|
| Accrual | The point when a legal claim arises. Its definition affects a limitation period and depends on the applicable law. |
| APR | Annual percentage rate. It is not necessarily the same as the interest rate and may include certain credit costs. |
| Charge-off | An accounting classification of a loss. It does not by itself cancel the consumer’s obligation. |
| Collection agency | A business collecting accounts; it may act for another owner rather than own the debt. |
| Debt buyer | An entity that purchases accounts. The servicer or collector contacting you may be a different company. |
| Default | Failure to meet an agreement’s requirements. Contract and legal consequences depend on the obligation. |
| Default judgment | A court judgment entered after a required response or appearance is missed, subject to applicable procedure. |
| Deficiency | A balance that may remain after collateral is sold and proceeds and credits are applied. |
| Dedicated account | An account used to accumulate funds for a settlement program. Depositing money is not the same as paying every creditor. |
| Discharge | A legal release of qualifying personal liability, often in bankruptcy. It is distinct from a charge-off. |
| Disposable earnings | A legal earnings measure used in wage-garnishment rules; it is not simply all take-home pay in every context. |
| Garnishment | A process for taking part of earnings or other property under applicable authority and exemptions. |
| Insolvency | For cancellation-of-debt tax purposes, a defined excess of liabilities over assets immediately before cancellation. |
| Judgment | A court determination that can create enforcement rights subject to exemptions and procedure. |
| Lien | A claim against property that can affect sale, refinancing or enforcement. |
| Limitation period | A time limit for bringing a legal claim. It is distinct from a credit-reporting period and may require a defense. |
| Minimum payment | The amount required by an account’s current billing terms, which may change with the balance and other charges. |
| Settlement | An agreement resolving a claim on negotiated terms. Complete the required payments and retain the written release. |
| Statute of limitations | The law establishing a limitation period, including classifications, triggers and exceptions. |
| Validation notice | Information a covered debt collector must provide about an alleged debt and related dispute rights. |
| 1099-C | An information form reporting cancellation of debt in covered circumstances. It does not alone determine whether the cancellation is taxable. |
Read the term in its context
Use the actual agreement, notice and applicable rule. A glossary helps you ask a precise question; it cannot decide a legal right or account status.
Sources & further reading
Sources checked October 19, 2026. Rules and programs can change. This article uses AI-assisted research and has not received attorney or other professional signoff. Read our editorial standards.
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Educational guidance for U.S. debt situations. This page does not decide legal rights, eligibility, fees or suitability. If you have a court, property or service deadline, seek appropriate help promptly; reading this page does not extend it.