Collection Newsletter

Glossary of Legal Terms

Acceleration Clause – A clause in extended-term contracts which makes the entire balance of the contract term due if the debtor defaults

Accord and Satisfaction – An agreement (“accord”), and the performance thereof (“satisfaction”), which resolves and discharges a claim; may be stated between the parties or implied by law

Account Stated – A cause of action by a creditor to receive a definite sum of money from a debtor, which sum is definite either by express agreement or by agreement implied by law

Acknowledgement – A letter or other notice from an attorney confirming the attorney has received a claim and agrees with the rates and conditions outlined

Action – A lawsuit or the basis for a lawsuit; sometimes “cause of action”

Advanced Court Costs – [See “Court Costs” below]

Advance File –  A phrase commonly used by attorneys to indicate when to expect their next status report

Affidavit – A sworn statement, usually not admissible as evidence at trial, but often sufficient to support a default judgment or a motion

Affirmative Defense – A document, filed with a court, stating a defendant’s defenses to a lawsuit, or a plaintiff’s defenses to a countersuit

Agent – One authorized by another (the “principal”) to act on the other’s behalf

Alias “__________” – Usually “alias summons”, the second or more of any summons, writ, subpoena or execution process after the previous effort was unsuccessful, usually for lack of proper service

Answer – A document, filed with a court, stating a defendant’s responses to a lawsuit, or a plaintiff’s responses to a counter suit

Appeal – A request to a higher court to review a decision of a lower court

Appellant – One who initiates an appeal

Appellee – One against whom an appeal is initiated

Arbitration – A hearing by a neutral third party to resolve a dispute, usually requiring live witness testimony and other evidence, mandatory before trial in some jurisdictions

Assignee – One who receives a transfer of rights or interests from another (the “assignor”)

Assignment – The transfer of rights or interests by one person (the “assignor”) to another (the “assignee”)

Assignor – One who transfers rights or interests to another (the “assignee”)

Assignment For Benefit Of Creditors – An insolvency process without court supervision, involving a transfer of all of a debtor’s assets to an “Assignee” in trust, for the purpose of selling and distributing the assets for benefit of creditors, usually resulting in no payment to unsecured creditors

Attachment – A court process to take property (or in some jurisdictions a person) into custody of the court, either to satisfy a claim or judgment, or as a means of acquiring jurisdiction

Bank Garnishment – A garnishment issued to a debtor’s bank or financial institution

Bankruptcy – A court filing by a debtor to stop creditors from collecting their claims, with the goal of distributing the debtor’s assets to creditors and giving the debtor a “fresh start” free of prior debts

Chapter  7 – Total liquidation of assets, by an individual or a business entity, usually with no distribution to unsecured creditors

Chapter 11 – Reorganization by a business entity, with the possibility of a small, long-term distribution to unsecured creditors

Chapter 12 – Reorganization by a farmer, with the possibility of a small, long-term distribution to unsecured creditors

Chapter 13 – Debt restructuring by an individual with regular wages or salary, with the possibility of a small, long-term distribution to unsecured creditors

Bench Trial – A trial conducted before a judge, as distinguished from a trial conducted before a jury

Beneficiary – One who benefits from, or is entitled to benefit from, the acts of another, or who has an interest in property or assets held by another

Bill Of Sale – A document by which one transfers title to goods or personal property to another

Body Attachment – A court process, similar to an arrest warrant, directing a sheriff to take custody of a person to compel that person’s appearance before a court, usually to answer a contempt for failure to appear in response to a previous order

Bona Fide – In good faith; genuine

Bond – A written contract whereby one (a “surety”) agrees to be responsible for the debts or obligations of another (the “principal”) upon the occurrence of specified conditions

Breach Of Contract – The failure to perform, without lawful excuse, some obligation under a contract

Bulk Transfer – The transfer of all or a major portion of a debtor’s inventory or equipment outside the ordinary course of business

Burden Of Proof – The duty of a party to a lawsuit to establish a fact or facts through evidence, generally borne by a plaintiff with respect to claims, and by a defendant with respect to defenses