Balance Transfer
The process of moving a high-interest credit card balance onto another card with a lower interest rate. Consumers often use a balance transfer to consolidate multiple high-interest debts onto one card, but the low interest rate usually lasts for a brief three month period.

Balloon Payment
A loan payment made at the end of the term to pay off the remaining balance. The payment amount is larger than other payments. During the life of the loan, the borrower makes small prioritized payments, usually monthly, until the end of the term when the balloon payment is made to eliminate the remaining sum.

Bank
A financial institution offering loans and credit to customers while holding money deposits and other valued items. Banks offer a variety of products to help consumers manage debt, such as personal loans and debt consolidation loans.

Bankruptcy
An action pursued by debtors in federal court to relieve debts and gain protection from creditors seeking legal action. Personal or consumer bankruptcy occurs in one of two forms: Chapter 7 (asset liquidation) and Chapter 13 (debt adjustment).

Bankruptcy Trustee
A person legally appointed by a federal court to serve the interests of creditors involved in a Chapter 7 or Chapter 13 bankruptcy case. The bankruptcy court executes its mandate through the trustee, who's responsible for ensuring the creditors receive the maximum amount of restitution.

Beneficiary
A term describing the person entitled to receive assets and proceeds from a life insurance policy, retirement plan, will or trust. The amount beneficiaries receive from a whole life insurance policy can be negatively affected by debt consolidation when the policyholder taps into the funds to pay off debt.

Borrower
The person who obtains a loan or is granted a line of credit from a lender or creditor while accepting the liability of repaying the debt in full. The goal of the borrower, whether seeking a loan to buy a car or relieve debt, is to receive the best possible repayment term and lowest interest rate.

Broker
A person who acts as an intermediary between a buyer and seller of securities. Also, a person who accepts a fee to help a buyer obtain sufficient insurance coverage. An investment broker can also be a lender for borrowers who hold securities in a margin account, lending a margin loan.

Call Option
An option that allows the issuer to reclaim securities prior to maturity. This option often repels investors from taking out a margin loan to finance debt consolidation. If the market value of the securities declines, the investor may need to deposit more money into the margin account to make up for the reduced value, or the broker will demand a margin call and take control of the funds.

Car Title Loan
An advancement of money that uses the borrower's automobile as collateral against repayment. These loans often carry unfavorable repayment terms and expensive interest rates. Car title loans can be a form of secured debt consolidation, although the interest rate, near 25 percent, is often higher than the rates charged on credit cards.