Glossary

| a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p | q | r | s | t | u | v | w | x | y | z |

Administrator

The Insolvency Practitioner appointed by the court to handle the affairs of a company that is the subject of an administration order.

Arrears

Arrears occur when you fail to meet your contractual bills. The most serious arrears are in relation to your electricity, gas and heating bills as serious missed payment can lead to these utilities being cut off.

Assets

These are items you own which have monetary value for example your home, your car and any savings you have.

Bankruptcy Order

A court order which confirms that a debtor is unable to pay their debts.The order allows the bankrupt's property and other assets to be taken away and sold with the proceeds being shared among the Creditors.

Charge

A claim on an asset, usually a property, which must be satisfied before any other claims can be considered. Home mortgages are the most common type of charge. When the property is sold the amount owing to the mortgage provider must be repaid before any other claimant can be paid.

Charging Order

A court order placing restrictions on the disposal of certain assets, such as property or securities, given after judgement and giving priority of payment over other Creditors.

County Court Judgement (CCJ)

County Court Judgement is a court order taken against the debtor which states that the money a Creditor is claiming is due and payable by the debtor. A CCJ is public and will affect your future credit rating.

Credit Rating or File

A record of how creditworthy you are. A number of credit reference agencies store information on all individuals who have previously had or applied for credit. This information will be available every time you apply for any form of credit.  You can check yours here:

Creditor

A Creditor is an individual, business or organization who lends you money. Most commonly this is a bank, building society or credit card company.

Creditors' committee

A Creditors' committee is formed to represent the interests of all Creditors in supervising the activities of an administrator or trustee in bankruptcy, or receiving reports from an administrative receiver

Debtor

An individual in debt. The person who owes money to another person, company or organisation.

Default Notice

A notice issued by your lender after you have failed to pay what has been contracted. It provides notice that your lender intents to take steps to recover what they are owed.

Deficit

The difference between what you are spending and earning.

Discharge

Discharge occurs when the bankruptcy period ends. Not all restrictions come to an end when the bankruptcy order is discharged.

Dividends

Dividends are payments made by a company to its shareholders, normally after the company has made a profit.

Equity

The difference between the value of the property in the current market and the mortgage taken out. If the mortgage was higher than the current property value this is called negative equity.

Final Discharge

Notification that you have completed your formal Debt Arrangement Scheme.

FSA

Financial Services Authority.The industry regulator which authorises financial firms in the provision of financial advice to the public.

Individual Voluntary Arrangement (IVA)

An individual voluntary arrangement (IVA) is a procedure where a person comes to an arrangement with his Creditors as to how their debt will be discharged. An IVA proposal requires the approval of the court and is under the control of a supervisor.

Informal arrangement

It is possible to approach Creditors individually and make them an offer to settle debts, whether by a one off payment or by making monthly repayments over an extended period. Such an arrangement is not legally binding.

Insolvency Practitioner

The only person who may act as office holder in an insolvency proceeding. Must be authorised by one of the Chartered Accountancy Bodies, the Law Societies, The Insolvency Practitioners Association or the Department of Trade

Insolvent

The main definition of insolvency is that the debtor is unable to pay their debts as they fall due. This usually applies to individuals who cannot keep up with repayments or settle their debts by the agreed or contracted date.

Leasehold

A leaseholder holds the title to land only for a finite term i.e. the length of the lease upon payment of a consideration e.g. rent.

Lender

The actual company that lend you money – normally a bank, building society or credit card company.

Mortgage

A transfer of an interest in land or other property by way of security, redeemable upon paying a given sum of money. Normally used for the purchase of a house or flat.

Secured Debt

Money which is borrowed against the security of an asset, in most cases against your home. If agreed terms are not adhered to, the lender has the right to demand their money back from the sale of the asset.

Surplus Income

The amount you are left with after you have deducted all of your spending from your income. This is the money which is available for Creditors

Term

Period of a loan expressed in months or years.

Trustee in Bankruptcy (Trustee)

The licensed insolvency practitioner appointed to deal with your estate and assets during a formal Debt Arrangement Scheme or bankruptcy.

Unsecured Loan or Debt

An unsecured loan is a loan that is issued and supported by the borrower’s creditworthiness rather than the value of their assets (home). The maximum loan is usually £25,000.

Windfalls

Any assets or money which comes to light during the period of debt which must be put towards paying off your Creditors.