The Debtor's Dictionary
These are definitions of words and phrases that have come into common use in the 2008-2009 Recession. They're worth knowing, because once you know a new term exists, you know there's a trend. Medical insurance terms are included because when people with serious illnesses ask medical insurance companies to honor their promises, fifty percent of those customers quickly go into debt or go bankrupt. I'm now adding recent job-related terms, as the dictionary expands beyond the original idea.
chasing the balance down – the current practice of credit card companies to continually reduce your credit limit on accounts that you are paying down, or even accounts you don't use.
According to interviews with credit rating agencies, this doesn't hurt your credit rating. Since credit rating agencies openly admit that the credit limit-to-debt ratio is a major factor in credit scores, it is hard to understand how this can be true.
default movement, the – late-2009 term for the growing national trend towards "strategic default" (definition on this page).
12/6/09 - the term seems to be spreading from the hard-hit states like California, Nevada, and Florida.
free rider / free loader – traditional credit industry terms for people who pay off their balance in full every month.
"Free rider" is what the publicists say to the press; "freeloader" is the term used within the credit card companies – even though the finance companies make money on every transaction by getting a percentage from the store that accepted the charge card.
gray-collar – jobs that lie between white- and blue-collar, typically requiring some sort of trade skills and more than a high school education, such as a certification or two-year college degree.
These jobs are commanding interest because many of them are essential to the economy and relatively safe from layoffs. Examples would be technical support, auto shop service manager, physical therapist, or park ranger. Gray-collar jobs almost all involve a) a specific skill set and b) some physical labor beyond typing or filing.
medical bankruptcy – a personal bankruptcy driven by excessive medical bills, either because the individual had no health insurance, because their health insurance was not full coverage, or because the health insurance company practiced recission when the insured made a claim.
Sixty percent or more of American personal bankruptcies are estimated to be driven in part or in full by medical bills.
medical tourism – the practice of traveling to another country for medical care.
It's everywhere. Americans buy their drugs in Canada, where the drugs are half the price, more strictly regulated, and equal or better quality. Canadians go to the U.S. for cancer treatment because it's much more advanced. And both Americans and Canadians go to Cuba for MRIs, because they're much cheaper and faster.
prelancing – basically, an internship job that offers a more prestigious job title.
This term – apparently a variant of "freelancing" – appeared in mid-2009, and describes non-paying jobs, usually part-time, where skilled people work in return for a) something that looks good on their resume, and b) the possibility of being hired.
recission – legal term for cancellation of a contract either under law or by mutual consent.
This has become a commonly-known word as American health insurance companies come under increasing scrutiny. Since people in the hospital rarely cancel their medical insurance, by eliminination recission refers to health insurance companies weaseling out of their obligations using legal loopholes – or simply fabricating claims that policy-holders had concealed pre-existing medical problems.
ruthless defaulter – people who have decided the hell with a credit rating, and just stop paying the creditors.
When the creditors' collections departments begin the calls, these debtors' attitude is not fear, or anger, but boredom. (Collections people are looking for some kind of emotion, so no emotion freaks them out. Ruthless defaulters are a subgroup of people who were formerly called "deadbeats.")
strategic default – when borrowers sit down at the kitchen table and do the math, decide that their house is too far underwater, or their credit has run away, and then calmly default on all debts at the same time (or default on all of a certain category, e.g., they might keep paying their mortgage but default on several credit cards similtaneously).
These people often have excellent credit ratings and have never been late on a payment. They're the ultimate nightmare to the financial industry, because data analysis can't predict what they'll do. (When someone who never used credit cards at all starts charging all their groceries and gas, the lenders can see a pattern, and the computers may freeze the credit line in as little as five minutes.)
May 5, 2011: for additions to this page see www.walkawayfromdebt.com
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