Glossary of Debt Terms

Administration Orders

An Administration Order may apply if you have at least one County Court Judgment against you and total debts do not exceed £5,000. It allows a County Court to administer payments to all your creditors. One payment is made to the court and the court splits this between all creditors according to how much you owe. As long as an Order is in force, creditors cannot take further enforcement action and interest is stopped.

Administration Order (AO)

An administration order is a court order placing a company that is, or is likely to become, insolvent under the control of an administrator following a petition by the company, its directors or a creditor. The purpose of the order is to preserve the company’s business and assets to allow a reorganisation or ensure the most advantageous realisation of its assets whilst protecting it from action by its creditors. County court process permitting an individual with modest debts to pay off instalments. No insolvency practitioner is involved.


Arrears occur when you fail to meet the contractual payments to your household bills. Missing payments to your mortgage, rent or council tax etc can lead to serious arrears, which must be paid immediately. You can also be in arrears if you don’t maintain your payments on unsecured debts. Arrears will accumulate if you continue to miss payments and you will be required to pay an additional amount on top of the regular payments until the arrears are cleared.


Assets are items you own that have monetary value. Assets would include your property, car, stocks, shares, antiques and savings etc. Assignment – the sale or transfer of a contract or agreement by one company to another.

Assignment Notice

A notice to the debtor informing him/her that a debt has been assigned (sold) to another company. Required under s136 of the Law of Property Act 1925.

Attachment of Earnings

An order by a court that debt repayments should be deducted from a debtor’s income at source. If you fail to pay money as ordered in a County Court Judgement, the creditor can apply to the court to have money deducted from your wages. Deductions are made at the rate of payment decided by the court as reasonable. (Attachment of Earnings Orders for Council Tax are dealt with by the Magistrates Court under a different system).

Attachment of Benefits

Similar to Attachment of Earnings, if you fail to make the repayments once a County Court Judgment has been issued the council may take deductions from your benefit. They are made at the rate of 5% of the personal allowance for a single claimant aged 25 and above. The attachments of benfits will continue until the debt is discharged.


Employed mainly by the Court to enter into your property and take goods to sell at auction to cover debt that you owe to a lender who has previously obtained a CCJ to which you have failed to comply with.

Balloon Payment

A lump sum payment on a hire purchase or conditional sale agreement once some monthly payments have been made. Bank – an institution likened to an organisation that lends out umbrellas but insists on having them back as soon as it starts raining.


A legal procedure that writes off all debts (with a few exceptions). You or one of your creditors can petition for bankruptcy. The debt is usually discharged after two to three years. However, if there is any equity in a bankrupt’s home or other assets, they will usually be sold to repay debts. Bankruptcy order – A court order making an individual bankrupt.

Bankruptcy Petition

A formal document, usually issued by the debtor himself/herself or by a creditor, which is submitted to the court in order to obtain a Bankruptcy order.

Bridging Finance

A bridging loan is effectively a short term loan secured on property by way of either a first or second mortgage. Short term bridging loans can provide invaluable help in cases of temporary cash shortfall. Bridging loans can be used for a number of reasons: Purchase of a new property where the funds are required quickly with the minimum of fuss. Purchase of property for improvement or extension and then resale. Auction purchase. Capital raising. Usually a bridging loan is for a period of between 3 and 6 months, however a longer term may be justified under certain circumstances.

Cashflow Forecast

A schedule setting out estimates of future receipts and payments, analysed into various catergories and showing the impact at specified intervals on the bank balance.

CCA 1974

Consumer Credit Act 1974 – the act of parliament which regulates credit in England and Wales. This Act is supplemented by various regulations (mainly published in 1983) and the CCA 2006.

CCA 2006

Consumer Credit Act 2006 – a major amendment to the CCA 1974.

Charging Order

an order of a court that a charge be placed on a property so that, when it is sold, the first part of the proceeds of the sale go to pay off an outstanding debt. A charging order effectively turns an unsecured loan into a secured loan. The existence of a charging order is noted on the deeds of the property in question. The Charging Orders Act 1979 allows creditors with a high court judgment or county court judgment the ability to secure the debt to assets. A charging order can’t be made unless payments have been defaulted on a CCJ.

Charge for Payment

A document served in Scotland, where the debtor has been ordered to pay an outstanding debt within a given timescale. Similar to a County Court Judgment in England and Wales.

Commercial Mortgage

1st and 2nd charge commercial mortgages and loans are available from a wide selection of lenders for a wide selection of clients, including clients with no accounts, CCJ’s and arrears, self certification available. Where can we help? Industrial, factories, offices, pubs, clubs, and hotels. General commercial investments, professional practices, post offices, general stores and retail.

Compulsory Liquidation

The placing of a company into liquidation as a result of an application to the court, usually by a creditor.

Creditors Voluntary Liquidation (CVL)

A CVL is the process where the directors of an insolvent company can voluntarily take steps to wind up the company. The directors call meetings of the company’s shareholders and creditors to consider resolutions to wind up the company and to appoint a liquidator. This is used when a company is insolvent and no longer has a viable business worth saving.


The loaning of money.

Credit Agreement

An agreement (contract) between a creditor and debtor to loan money. Credit Card – a credit token as defined in the CCA 1974.


Someone lending money. A person or company which lends you money (usually a bank, building society or credit card company).


Credit Reference Agency – one of several companies who maintain records of debtors’ history of payments, etc. Credit Record – the record of a debtor held by Credit Reference Agencies.

Credit File

A file held by authorised companies with financial history regarding credit applications and credit you have obtained.

County Court Judgment (CCJ)

A judgement issued by the court in order for you to make payments to a debt you owe when you have failed to keep to an original agreement with the lender and not made any attempts to come to an agreement for repayment.

Contractual Payments

These are the payments you agreed to pay each month when you signed the credit agreement. Failing to make the contractual payments can lead to arrears and this can affect your credit rating.

Company Voluntary Arrangement

This is the equivalent to an Individual Voluntary Arrangement, but for businesses. It allows any financial problems to be overcome with the creditor’s consent so that the business can continue to trade.

Company Voluntary Arrangement (CVA)

A CVA is a means whereby a financially troubled company may reach a legally binding agreement with creditors for satisfaction of its debts or for a scheme of arrnagement of its affairs. How does a CVA work? In short: The directors identify a need to come to an arrangement with the company creditors They consult a licenced insolvency practioner (IP) Together with the IP the directors prepare a proposal The IP agrees to act as the company nominee The nominee agrees to convene a meetings of creditors (MOC) At the MOC the creditors consider the proposal and if 75% in value of those voting creditors agree the scheme proceeds.

Corporate or Business Rescue

This is about putting a strategy together that is both achievable and acceptable to the company’s or business’s creditors – the people it owes money to, such as banks, Inland Revenue, VAT, investors and employees. A satisfactory outcome can be achieved in various ways dependent on the state of the business. The process usually involves a combination of one or more of the following: Regaining stability, Financial restructuring and refinancing, and Business Turnaround. When should a business ask for assistance? Basically whenever the owners, partners or directors are ready to accept help as without their co–operation any strategy will fail.

Certificate Of Satisfaction

A certificate issued by the court to prove a CCJ or Attachment of Earnings has been paid. A fee of £10 is required.

Data controller

The person nominated by a company in accordance with the provisions of the Data Protection Act 1998 to be responsible for the keeping of personal data Debit Card – a card issued by a bank that allows money to be drawn or purchases made but with the entire balance being due at the end of each month. Debit Cards are not regulated by the CCA 1974.


The borrowing of money.

DCA – Debt Collection Agency

A company specialising in collecting defaulted debts. They can either operate on behalf of a creditor or can have the debt assigned to them, in which case, they become the creditor.


Someone who owes money.


The status of a debt when repayments have been missed.

Default Notice

A notice in a specified form required under s87 of the CCA1974 before a creditor can take certain actions to enforce a credit agreement. The exact format of default notices is specified in the 1983 regulations.

DMP – Debt Management Plan

A plan agreed with creditors for paying off debts by instalments.

Earnings Arrestment

The Scottish equivalent to an Attachment of Earnings Order. Where the court can order monies to be deducted from the debtor’s wages to repay an outstanding debt.


This is the difference between the value of the mortgage against a property and its current market value. If the sum of all loans secured on a property is greater than the market value, this is known as negative equity.

Equipment & Vehicle Leasing

A vast network of fast flexible asset based finance solutions – from the carpets to heavy machinery. Covering cars and vans. Computers and general commercial equipment.

Ex Parte

This is a term used when legal proceedings are brought by one person in the absence of and without representation or notification of other parties.

Final Discharge

A final discharge will be posted to you to show the end of your bankruptcy. This document will mean you are free from debt and the bankruptcy is over.


Deliberately deceiving someone with false information about yourself in order to gain an advantage (usually financial).


When a person has assured the creditor that the debtor will make the repayments. If the debtor fails to make the payments the guarantor will be liable for them Guarantee – An agreement made by one person to pay a creditor on behalf of another should that other person default.


A criminal offence defined by the Protection from Harassment Act 1997 Hire–purchase – an agreement whereby a company leases goods to a customer and the ownership of the goods passes to the customer at the end of the lease period. Hire–purchase agreement – an agreement, regulated by the Consumer Credit Act 1974, to enter into hire–purchase arrangement.

Income Payments Order

In Bankruptcy, the Official Receiver or Trustee can apply for an Income Payments Order if they feel that the debtor can afford to make a regular contribution into the bankruptcy, which would then be distributed for the benefit of the creditors.

Informal Arrangement

This is the simple term for arranging reduced payments to your creditors without the assistance of a third party.


Having insufficient funds to meet all debts, or being unable to pay debts as and when they fall due. Insolvency Practitioner – A person who specialises in insolvency – they are recognised by the appropriate board and are fully qualified to deal with your insolvency. Interest – a percentage charge added to a loan.

Invoice Factoring / Discounting Brokerage – Cash Flow Finance

Factoring broking service means that we can help you improve your cash flow by providing an immediate injection of cash against the value of your outstanding invoices. Then as you raise an invoice, we can release up to a percentage of the value of that invoice say for instance 85%. The remaining balance is paid to you, less a small service fee, once we receive payment from your customer. This means your business has access to an ongoing supply of cash linked to your sales. So as your business grows so does the amount of funding available to you. How Much Does It Cost? Our services are tailored to your business so the fees will depend upon your specific needs. However, there are two types of fee. The first is the cost of the money you use, The second is a service fee.

IVA (Individual Voluntary Arrangement)

(Usually) a 5 year formal arrangement with your creditors. A monthly payment is made during the term and the debt is discharged at the end of the term. All interest and charges are prevented from accruing and an affordable monthly payment is made into the arrangement. It is a private and legally binding arrangement, offering a realistic option for people with larger debts.

Joint and Several Liability

When you take out a credit agreement, such as a loan or overdraft in joint names (with another person) then you are both liable for the full amount of any debt. (Credit cards are not normally in joint names, although you may have two cards, only one person will be the account holder). This means that if one of you fails to repay the debt (this can occur following divorce or separation) then the creditor could still ask the other for payment of the full amount (you are not just responsible for your “half” of the debt).

Land and Property Development

We typically offer land & property purchase development – land purchase to 80% and development funding to 100%. Subject to status and in some cases additional security.


A person or company who lends you money (usually a bank, building society or credit card company).


When the bailiff retrieves payment or goods to raise the sum on the warrant and costs. Notice of this comes 7 days before the bailiffs arrive.

Liabilities Orders

This order follows non payment of council tax 28 days after due date. A court summons is issued and not paid within the time a liability order is issued. It allows authorities to make arrangement for the arrears to be paid by deducting it at source, from wages or benefits.

London Inter Bank Offered Rate (LIBOR)

Libor stands for the London interbank offered rate and is the main setter of interest in the London wholesale money market. Unlike bank rate, which is set directly by the Bank of England, Libor rates are set by the demand and supply of money as banks lend to each other to balance their books on a daily basis. Libor covers lending from overnight up to one year and is used to price all kinds of financial instruments such as loans and floating–rate mortgages. Instruments in several other currencies are also priced relative to Libor, such is the size of the London market.

Liquidation (Winding Up)

When a business/company is terminated or made bankrupt, all company assets are sold off and the proceeds go to pay the creditors. Any remaining money is distributed between the shareholders.

Letter Before Action or Letter of Claim

Letter before action is a requirement of the Pre–action Protocols Practice direction before litigation is commenced. a letter stating the matters complained of should be sent to the other side prior to issuing a claim, you should allow the other side a minimum of 28 days to respond.

Official Receiver

The Official Receiver (or Trustee in Bankruptcy) deals with the administration for the bankrupts. They will normally carry out an interview of the bankrupt and it is ultimately their decision as to whether assets should be sold for the creditors benefit. OC – The Original Creditor.

Partnership Administration Order (PAO)

A PAO is designed to protect partnerships from creditor action while a restructuring or sale plan is developed.

Partnership Liquidation

This is a procedure to wind up a partnership as an unregistered company. The procedure is likely to be used by creditors to enforce payment of a debt or when the partners have decided that the partnership is insolvent, has no future and cannot continue to trade.

Partnership Voluntary Arrangement (PVL)

The procedure allows a partnership that cannot meet its debts to enter into a formal agreement with the partnership creditors to repay the debt either in full or partially over a fixed period. Pro – Rata – This means “in proportion to.” For example, if you owe Barclaycard £100, HSBC £900 and have £100 to pay them each month, the pro–rata payment to Barclaycard would be £10 per month and £90 per month to HSBC.

Project Management

Is the process of guiding a project from its beginning through its performance to its closure. Project management includes three basic operations: Planning: Specifying the desired results, determining the schedules, and estimating the resources.  Organising: Defining people’s roles and responsibilities. Controlling: Reconfirming people’s expected performances, monitoring actions and results, addressing problems, and sharing information with interested people Successfully performing these activities requires: Information: Accurate, timely, and complete data for the planning, performance monitoring, and final assessment. Communication: Clear, open, and timely sharing of information with appropriate individuals and groups. Commitment: Team members’ personal promises to produce the agreed upon results on time and within budget.

Property Restriction

During an IVA a creditor may put a restriction on your property. Usually the restriction will only apply during the time of the arrangement. Proof Of Debt Form – A form the creditor can submit to state their claim in an IVA or bankruptcy.


Creditors rarely attend creditors meeting; they assign a proxy to attend and vote on their behalf.

Right To Offset

When you have fallen into arrears with payments to a credit card or loan and you also hold a current account with the same company, they can use the “Right to Off–Set” to take funds from your current account (without your permission!) to bring the debt repayments back up–to–date. The right can also be used to bring an overdrawn current account back under its overdraft limit by moving funds from the customer’s savings account, if such exists.

Secured Loan / Debt

Money borrowed that is secured on an asset, i.e. house, car or furniture.If terms of payment are not kept to, the lender may demand the monies back by the sale or return of the asset that money was secured on. Secured Loan – a loan taken out secured on a property (a house or car for example). If the debtor defaults, then the creditor can take possession of the security to repay the loan.

Statutory Demand

A statutory demand is a legal document requiring the debtor to pay an outstanding debt in installments or as a lump sum, or to secure it against a property. The debtor has 21 days to pay. After that a bankruptcy petition may be issued.

Subject Access Request

A request made to a data controller for information held on an individual (the subject) under section 7 of the Data Protection Act 1998 Surplus Income – This is the amount you are left with if you subtract all your living expenses (housing costs, food, travel, clothing insurances etc.) from your incomes (wages, pensions, benefits etc). This is the amount of “surplus income” available for the creditors.

TCC – Total Cost of Credit

The total of arrangement fees and interest added to the loan amount.

Time Orders

Permits the court to make changes to the consumer credit agreement, very useful if the creditor won’t freeze interest or agree to the payments. Token Payments – When you are unable to make repayments to your creditors, it may be necessary to make small “token payments” to each creditor. This may be as little as £1.00 each per month, but it is better to send this “token payment” than send nothing at all. Transactions at an Undervalue – If, prior to bankruptcy proceedings, a debtor attempts to transfer an asset (such as a property, vehicle or expensive item) into the name of a family member or friend, in the hope that it will be excluded from the bankruptcy estate, the Official Receiver or Trustee can examine the debtors previous finances (up to 10 years prior to the bankruptcy) to establish if the asset was transferred for less than the market value. For example, if the debtor had sold a property to a friend for £1.00 and then attempted to go bankrupt 8 years later, with the hope of regaining the property once the bankruptcy had been discharged, the OR can apply to have the property sold and any equity realised for the benefit of the creditors. This is known as a “Transaction at an Undervalue”.


Either the Official Receiver or the Insolvency Practitioner who will take control of the selling of assets during an IVA or bankruptcy.

Unsecured Loan / Debt

A loan taken out with no security.

Variation Order

When a CCJ has been ordered but due to unforeseen circumstance the debtor can’t pay it, an application to vary the payments can be done by using the form N245.

Warrant of Execution

When debtors have failed to pay the CCJ and no variation orders have been made, bailiffs can go to property and acquire goods to the value of debt. Windfalls – Any assets that come about during an IVA or bankruptcy will go towards repaying the debt.