Debt: Glossary of Terms
Adjudications
"Adjudications" is an out-of-date term for bankruptcy.
Administration Order An agreement between an individual and a County Court, in which the Court helps the individual make arrangements to pay outstanding debts to creditors. The debts must not total more than £5000.
Arrangement to pay
An "arrangement to pay" is an agreement between a lender and a customer to vary a customer's payment schedule.
Attachment of Earnings Order
If a creditor has a judgment against you in the County Court which you do not pay then they can try to enforce the judgment against you. One of the ways this can be done is the creditor applies to the County Court for an Attachment of Earnings Order to be made. This order tells your employer to make deductions straight from your earnings in order to pay the debt. Your employer then sends the money to the court. Your employer can also deduct £1.00 every time they take money out of your wages towards the cost of administering the Attachment of Earnings Order.
The court can order deductions to be made directly from your earnings if:
- You are behind with payments on your County Court Judgment (CCJ).
- You are an employee (not self-employed or on benefits).
- You owe more than £50 on the judgment.
Bankruptcy Order
A way of dealing with debts that cannot be paid. Bankruptcy proceedings free an individual from overwhelming debts. The official receiver is responsible for the administration of bankruptcies.
CAIS (Credit Account Information Sharing)
CAIS refers to the credit account information held by Experian. Lenders provide information on accounts held with their customers. In return, lenders can view the same level of information when they make a search of our records during an application for credit. For example, banks that provide only information on accounts with a history of arrears can view only defaulted and delinquent accounts.
CCA (Consumer Credit Association)
The CCA is a professional body representing the interests of small companies in the credit industry.
CCJ
County Court Judgment (abbreviation) A county court judgement is a judgement for debt in the county court. This debt does not appear in the credit register if this debt is settled within 30 days of the date of the judgement.
Certificate of Satisfaction
A county court document confirming a judgment has been satisfied (paid in full) or set aside (removed from the public record because it was paid within one calendar month).
Citizens' Advice Bureau. - CAB
A voluntary service provided in most major towns which offers free advice to individuals on financial and other matters.
Creditor
A person or organisation which extends credit to others, i.e. your loan company, bank etc.
Debt management programme
The lender has reported that an account has been included in a debt management programme, for example one organised by a Citizens Advice Bureau or the Consumer Credit Counselling Service.
Debtor
An individual or company that owes debt to another individual or company (the creditor) i.e. YOU !!!
Defaulted account
This is an account for which you have not kept to a credit agreement and the relationship between you and the lender has broken down. The lender has terminated the credit agreement. A record of these accounts is kept for six years from the default date.
Default notice
A default notice is a formal letter a lender sends you when you are so far behind in your payments that they have decided your relationship with them has broken down. This varies from lender to lender but generally happens when you are between three and six months in arrears. If you receive a default notice it might mean that the lender is planning to take legal action to recover the money, but you must be notified separately of this. A default notice will almost certainly mean that the account will be shown as defaulted on your credit report, which will make it difficult for you to get credit. This information is kept on your report for six years but the balance should be updated as you make repayments and after six years it is removed, whether or not you're fully paid up.
Electoral roll
The electoral roll is a list of the names of all people registered at an address who are entitled to vote. Lenders use this information to check the identity of those applying for credit.
IVA (Individual Voluntary Arrangement)
Voluntary Arrangements are an alternative to Bankruptcy. If an individual has accrued a number of debts, they can enter into a Voluntary Arrangement, which is administered by the County Court or a Licenced Insolvency Practioner. It means that a repayment plan has been agreed with creditors.
Information Commissioner's Office The Information Commissioner's Office regulates the work of credit reference agencies and lenders. If an individual believes that a lender or a credit reference agency has not fulfilled their legal obligations they may request that the Information Commissioner investigates the matter on their behalf.
Liability Order
A liability order enables a Council to do one of three things:
- Instruct bailifs to recover enough property from your home to cover the debt
- Deduct the amount you owe directly from your earnings
- Declare you bankrupt
Official receiver
An official receiver is responsible for the administration of a Bankruptcy.
Order of Discharge
The terms of a Bankruptcy have been met.
Repossession
Members of the Council of Mortgage Lenders record information on customers who have given up their homes or had them repossessed.
Statutory Demand
A statutory demand requires that the debtor either:
- Pays the relevant amount
- Offers to secure it against property
- Offers to repay the debt in a way that is satisfactory to the creditor. For example, by instalments.
Some creditors use statutory demands as a way of persuading debtors to pay off the debt, usually by borrowing elsewhere.
However, statutory demands should be taken seriously. After 21 days the creditor can petition for a bankruptcy order. Therefore, it is usually worth contacting the creditor by telephone and asking them what their next step will be.
Ignoring a statutory demand may encourage the creditor to petition for bankruptcy. It is worth bearing this in mind, particularly if the debtor is contemplating petitioning for his own bankruptcy.
If the debtor wants to avoid bankruptcy he should consider:
- Making payment(s) to reduce the debt to less than £750; or
- Making an offer to pay by instalments; or
- Making an offer of a reduced amount in settlement of the debt; or
- Applying to have the statutory demand set aside
Time Order
A Court has the power to reduce the monthly payments and interest on your loan. However, the Court may only agree to do this if the debtor is in temporary financial difficulty and intends on returning to the original repayment terms once this difficulty is relieved
