A

Accounts Payable

The Amount owed to a creditor for goods or services obtained by the debtor.

APR - Annual Percentage Rate

The APR is the percentage of interest that you will endure over a year.

Arrears

An individual is in arrears when they fall behind on their minimum monthly payments.

Assets

This is an item that can be converted into a cash value to help pay off your debt, such as your home.

B

Bailiffs

These are employed to take your assets so that they can be sold in order to pay for your outstanding debts.

Bankruptcy

This refers to an individual who has legally been declared insolvent, as they are incapable of settling their debts.

Bankruptcy Order

This is a court order which legally declares someone bankrupt.

C

Capital

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

County Court Judgement (CCJ)

A CCJ is when a judgement is ruled against at individual in Court, stating that they have to pay back any debts owed to the lender.

Credit Rating

This rating is used by many financial companies to assess if you would be a reliable client to lend money to.

Creditors

These are the people or company which have are owed money from lenders.

D

Debt

This is the money which is owed back to the company or person from where it was borrowed.

Debt Consolidation

This method allows you to restructure your outstanding debt into one lower monthly payment.

Debtor

The individual who owes the debt.

Default Notice

This noticed is issued by the creditor, to inform the debtor that a previous agreement has failed. The creditor intends to take it to the next level to recover their money.

Disposable Income

This is the income which is remaining after all of the essential expenses have been made.

F

Finance

To raise money through the sale of assets.

G

Gross Income

The total income before any deductions have been made, such as tax.

Guarantor

The guarantor will have to make creditor repayments, if the debtor is unable to meet their financial commitments.

I

Insolvency Practitioner (IP)

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

Insolvent

A person becomes insolvent when they are no longer able to settle their debts when they fall due.

Interest Rate

The percentage charge which is set out on the money that you borrow.

J

Joint Liability

This is the legal liability that two or more people will have if the debts have been incurred together.

Judgement

A judicial ruling which will result in a legal obligation by one party.

L

Litigation

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

Loan

When a lump sum of money is lent, where regular repayments will often follow over a set peiod time along with an interest rate.

M

Mortgage

Usually a large loan amount which is offered on a property or land. It tends to be set over a longer period of time than any other loan.

P

Personal Loan

This is usually an unsecured loan, which is given by a financial institution for your personal use.

Priority Debts

These are debts which are given special priority, on the basis that if you don't pay them, you could be at risk of losing it. Examples of these include your mortgage, rent, secured loan, utilities, council tax etc.

R

Remortgage

This is when a previously mortgaged property is replaced by another. This could happen for a number of reasons, such as being able to get a lower interest rate.

Repossession

This is when your creditor takes your personal assets to pay back the debt that they are owed.

S

Second Mortgage

A Second Mortgage usually carries a higher rate of interest. It is when another mortgage is taken out on a property which is already mortgaged, which might be used to raise capital.

Secured Debt

When a debt is secured, it means that it is borrowed against your personal assets which can be demanded as payment if you fail to keep to the creditor agreement.

U

Unsecured Debt

This is when a debt is not secured against any asset.

Utilities

These are regarded as essential services, such as gas and 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.)