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GLOSSARY
Debt security
A security underlining a loan given by an investor or lender to a recipient. In return for the loan, the recipient agrees to pay interest and to repay the debt by a specified date.
Debt service
Debt service is the total of required principal and interest payments for a given loan over a certain time period.
Debt to available credit ratio
The combined amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual's credit cards. The higher a person's debt to available credit ratio, the higher risk that person poses to a lender.
Debt to income ratio
A percentage of pre-tax earnings that are used to pay off loans (auto loans, student loans and credit card balances). There are two ratios that lenders use to determine there decisions: The front-end ratio is the percentage of monthly before-tax earnings that are used for house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower's other debts are factored in.
Debt-to-available-credit ratio
Debt-to-available-credit ratio is the quotient of an individual's outstanding debt obligations divided by that individual's total amount of approved credit. If a person has only one credit account of $5000 and owes $2500 under that account, the debt-to-available-credit ratio is 50 percent. From a lender's perspective, a higher ratio indicates greater risk.
Debt-to-income ratio
Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.
Debt-to-income ratio - DTI
Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.
Debtor
A debtor is an individual or entity that owes money. Debtors owing money to a bank or lender are called borrowers, and debtors owing money to investors (who have purchased the debtor's bonds or debentures), are called issuers.
Debtor-in-possession
A debtor-in-possession is an individual or entity that has petitioned for bankruptcy protection, but still holds property in which creditors have a security interest. A business in Chapter 11 bankruptcy can continue to operate, using the assets that are secured by creditors to generate income. A business in this situation is a debtor-in-possession.
Debtor-in-possession financing
Debtor-in-possession financing, or DIP financing, is a debt facility made to a company in Chapter 11 bankruptcy. DIP financing usually takes priority over other debts. The debt is subject to strict covenants, and the company must fulfill its ongoing reorganization obligations.
Deceased alert
A deceased alert is a security notification indicating that a person has died, and should therefore not be issued credit. The alert prevents fraudulent parties from taking out credit in the decedent's name, or pursuing other, similar identity theft activities. Relatives of the deceased must request the issuance of a deceased alert from the credit bureaus.
Decedent
A decedent is a deceased person.
Decreasing term insurance
Decreasing term insurance is a life insurance policy under which the death benefit amount payable declines over time. If the insured's death event occurs in the first month the policy is in force, the beneficiaries will receive the maximum death benefit. In each subsequent period, the death benefit will be lowered by a specified amount or percentage. Decreasing term insurance addresses circumstances where the insured has higher liabilities and lesser assets in the earliest years of the policy.
Deed
A document or contract of legal bearing with evidence of title to property
Deed in lieu of foreclosure
A deed in lieu of foreclosure is an exchange of outstanding (and usually past-due) mortgage debt in return for full ownership rights to the mortgaged property. A property owner in distress can sometimes avoid foreclosure by negotiating this arrangement with the lender.