A

Accounts Payable

Amounts owed by to a creditor for any goods or services obtained by debtor.

Annual Percentage Rate (APR)

An APR is the percentage of interest you endure over a year.

Arrears

When an individual falls behind on their minimum monthly payments.

Assets

An item of ownership which can be converted into cash to pay back some of your debts, such as your home.

B

Bailiffs

They are employed to take your assets, in order that these can be sold to cover any of your overdue debts.

Bankruptcy Order

When a individually has a court order against them which means they are legally declared insolvent and incapable of paying back their debts.

C

Capital

The remaining amount of money/assets after any liabilities have been deducted.

County Court Judgement (CCJ)

When a court judgement is ruled against an individual, stating that they have to pay back any debts owed to a lender.

Credit Rating

The score rating used by most financial companies to see if you are a reliable and safe individual to lend credit to.

Creditors

A company or  person to whom you owe money.

Current Account

A bank account which is most commonly used for outgoing transactions and offers a number of services, such as an overdraft.

D

Debt

Money owed back to a company/person, from where it was borrowed.

Debt Consolidation

When your existing unsecured debt is restructured into a single lower monthly payment to one company.

Debt Management Plan

A repayment scheme which helps an individual manage their debts.

Default Notice

A Default Notice is issued by the creditor, informing the debtor that they are intending to take it to the next level to recover any outstanding debts owed.

Disposable Income

The income that is remaining after all essential expenses have been made.

E

Earned Income

The amount of income which comes from any employment or pension, as opposed to any unearned such as bank interest.

F

Finance

To raise money through the sale of assets.

G

Gross Income

The amount of income before any deductions, such as tax.

Guarantor

In the event that an individual will be unable to meet their financial obligations, then the guarantor is obliged to make the repayments.

I

Insolvency Practitioner (I.P)

An IP is a legally recognised expert, who will be able to deal with any Insolvency procedures, such as an IVAs.

Insolvent

When a person is no longer able to settle their debts when they fall due.

Interest Rate

A percentage charge set on the money that you borrow.

IVA - Individual Voluntary Arrangement

An IVA is when an individual comes to an agreement with their creditors, about repaying a fixed amount of debt, typically over 60 months. Any debt after this period is written off.

J

Joint Liability

The legal liability that two or more people have on any debts that they incurred together.

Judgement

A judicial ruling which is given within a court, which will result in an obligation by one party.

L

Litigation

A legal proceeding in court, where a person or company takes legal action against another.

Loan

A money advance given over a period of time, where regular repayments follow with an added interest rate.

M

Mortgage

A loan offered on a property or land, usually set over an extended period of time.

O

Ombudsman

An independent official which will investigate any complaints regarding a financial institution.

P

Personal Loan

Loans given for your personal use, and are not secured against any of our assets.

Priority Debts

Priority is given to your mortgage, secured loan, council tax etc, on the basis that if you don't pay them, you could be at risk of losing the service.

Proxy

The authority given to an individual who is able to vote and speak on behalf of the creditor.

R

Remortgage

When a previously mortgaged property is replaced by another, perhaps to provide a lower interest rate.

Repossession

When a creditor can take your personal possessions to fund it a debt that has not been paid on time.

S

Second Mortgage

When another mortgage is taken out on a property which is already mortgaged. This will usually carry a higher interest rate.

Secured Debt

When money is borrowed against a secured asset, such as your home. If the debtor fails to keep up repayments, then the asset can be demanded as a form of payment.

Statutory Demand

A notice which will require, within 21 days, the repayment of a debt exceeding £750, or the debtor may face bankruptcy proceedings against them.

U

Unsecured Debt

A debt which is not secured against any asset, such as a house or car.

Utilities

These are regarded as essential services, such as gas or electricity.

Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.

Your property will be protected within an IVA but you may be required to release all or part of any equity during the period of the arrangement.

Failure to complete the term of an IVA can result in bankruptcy.

(In Scotland, a PTD is the equivalent to an IVA.)