Has several meanings. Under the Truth in Lending Act, credit is the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment (15 U.S.C. § 1602(f)). In accounting, a credit is an entry that decreases an asset or increases a liability or equity. A party may also receive credit against a debt or judgment for amounts already paid.
A federal legal process for people and businesses that cannot pay their debts, governed by the Bankruptcy Code in Title 11 of the U.S. Code under Congress’s power to establish uniform laws on bankruptcies (U.S. Const. art. I, § 8, cl. 4). Common chapters are Chapter 7 (liquidation), Chapter 11 (reorganization) and Chapter 13 (adjustment of debts of an individual with regular income). Filing a petition generally triggers an automatic stay of most collection actions (11 U.S.C. § 362(a)), and an eligible debtor may receive a discharge of many debts.
A payment of money out of an account or fund, such as the release of loan funds, a distribution from a trust or estate, or a payment from a court’s registry. Money deposited in a federal court’s registry may be withdrawn only by order of the court (28 U.S.C. § 2042).
Has two meanings. First, the process of recording, summarizing and reporting financial transactions. Second, in law, an accounting is a detailed statement of transactions that a fiduciary — such as a trustee, executor or partner — must give, and that a court can order as an equitable remedy. Under the Uniform Trust Code, in states that have adopted it, a trustee must keep qualified beneficiaries reasonably informed about the trust’s administration (Uniform Trust Code § 813); state versions vary.
To compare two sets of records — such as a bank statement and a company’s own ledger — to confirm they agree and to identify and explain any differences. A reconciliation is the document or process that does this.
A chronological record that allows a transaction to be traced from its source documents through each step of processing to final reports, showing who did what and when. In electronic systems, audit trails and metadata can help authenticate records, for example by evidence describing a process or system and showing that it produces an accurate result (Fed. R. Evid. 901(b)(9)).
An independent examination of financial statements, records or procedures to determine whether they are accurate and follow applicable standards. Audits of financial statements follow auditing standards such as GAAS or PCAOB standards. A tax audit is an IRS examination of a return; the IRS is authorized to examine books and records to determine the correctness of a return (26 U.S.C. § 7602).
What a party obtains through a lawsuit, settlement or other legal process, such as money damages or the return of property. In accounting, a recovery is an amount collected on a debt that was previously charged off.
An accounting entry in which a creditor writes off a debt as a loss on its books because it does not expect to collect it. Federal banking regulators’ policy generally calls for open-end retail credit, such as credit cards, to be charged off after 180 days past due. A charge-off does not cancel the debt: the borrower still owes it unless it is paid, settled, discharged in bankruptcy or otherwise forgiven, and the creditor may still try to collect it or sell it, subject to limits such as the statute of limitations.
Another word for setoff: reducing one obligation by another. In federal collections, the government can offset — withhold — certain federal payments to collect delinquent debts through the Treasury Offset Program. Agencies may offset federal payments for debts owed to the United States, and, by agreement, certain debts owed to states (31 U.S.C. § 3716). Federal tax refunds may be reduced for debts owed to federal agencies, past-due child support, and certain state income tax and unemployment compensation debts (31 U.S.C. § 3720A; 26 U.S.C. § 6402).
Looking for a state's court rules instead? See procedures for all 50 states and D.C.