Debt Management Jargon Buster
Adverse Credit
A term applied to a borrower or application that has problems with credit, i.e. late payment, defaults or County Court Judgment (CCJ).
Adverse Credit Lender
A lender who lends to applicants with adverse or bad credit.
Administration Order
Similar to debt management but administered by the courts (also called a court administration Order) - only applies if you owe less than £5,000 and have at least one CCJ registered against you - like a debt management plan the courts charge for this service.
Applicant
The person or persons applying for the debt management plan.
Application pack
The pack sent to clients who are applying for a debt management plan.
APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
Arrears
The amount of missed payments you have fallen behind with - termed in either months missed or pounds outstanding.
Assets
Anything that belongs to the debtor that can be used to repay debts.
Bad Credit
A term applied to a borrower or application that has problems with credit, i.e. late payment, defaults or County Court Judgement (CCJ).
Bailiff
A court officer whose role is to execute warrants etc issued by the courts.
Bankrupt
A debtor (person, company, organisation) whose assets are administered by a court appointed trustee for the purpose of redistribution to the debtors creditors.
Bankruptcy
The legal process by which a debtor who owes more than their assets has these assets transferred to a court appointed administrator.
Bankruptcy Petition
A request made by either you as a debtor or by a creditor to the court to make you bankrupt.
Caution
A 'Registration of Caution' is a caution registered on the land registry title of a property which means the property can not be sold or remortgaged without the cautioner (the person or organisation who registered the caution) being notified. Usually the caution needs to be repaid upon completion of any sale or remortgage.
Charging Order
A charge registered through the courts on a piece of property or land by someone (a person or organisation) you are in arrears with - if you remortgage or sell the property the charge will have to be repaid. It is sometimes possible to have a charging order 'postponed' in order for a remortgage to proceed (if their is limited equity in the property) by way of a deed of postponement.
Contract
A legally binding agreement, either oral or written, to do or not do something.
County Court Judgment - CCJ
A ruling of bad debt issued by the courts - the judgment will be recorded on your credit file.
Credit
An agreement under which one party (the borrower) receives money or property on the condition they repay the other party (the lender) at a later date.
Credit Check
The process where a check is made on the credit history of a mortgage
Credit History
A history of a persons debts.
Credit Rating
See 'Credit Scoring'
Credit Reference Agency
A company or organisation that stores financial and public records dealing with the payment history on a prospective borrower - credit reference agencies hold your credit file.
Credit Report
A report prepared by a credit reference agency which details the credit history of an individual - the credit report will be used by a lender to help assess the application of an individual.
Credit Scoring
The procedure by which a lender allocates a 'score' based on the information held on the credit file and the lenders application - different lenders use different formats for credit scoring - not all mortgage lenders credit score and they may use other factors and criteria when determining to lend.
Debt
An amount owed by one person or party to another, in a debt management plan this usually refers to monies owed to an unsecured creditor.
Debt Consolidation
A procedure whereby a number of loans, each with individual interest rates are repaid with another loan - consolidated into one loan with one interest rate.
Debt Management
An informal arrangement between a debtor (borrower) and creditor (lender).
The borrower pays one monthly fee to a third party and they distribute the one monthly payment around the borrowers creditors on a pro-rata basis. The payment is worked out after the borrowers disposable income has been ascertained, thus ensuring the borrower is able to maintain a reasonable standard of living whilst repaying the creditors. If done through a business, they will typically take a monthly fee from the disposable income to cover administration costs.
Default
The failure to keep up with repayments on a credit agreement (such as a mortgage) - see what is bad credit
Disposable Income
The money left from a persons income (usually calculated monthly) after living costs and priority debts have bee deducted, money that is deemed as disposable income is often used to assess ones ability to repay if normal monthly creditor commitments can not be maintained.
Estate
In bankruptcy terms this refers to your assets and property which a court appointed trustee can deal with to pay your creditors.
Financial Ombudsman Service - FOS
An organisation established by law to help settle individual disputes between consumers and financial firms.
Guarantor
A person, other than the borrower, who guarantees to meet loan payments in the event the borrower defaults.
Homeowner Loan
See 'Secured Loan'
Insolvent
Being unable to pay debts on the due date.
Insolvency Practitioner
Someone who is authorised and licensed to advice insolvent individuals (and companies), usually a solicitor or an accountant.
Interest
The charge made by lenders when you borrow their money.
IVA - Individual Voluntary Arrangement
A formal arrangement between the debtor (borrower) and creditors (lenders), it is a legally binding agreement intended to help those with serious debt - An Individual Voluntary Arrangement must be arranged by a licensed Insolvency Practitioner.
Joint Income
The total income of two applicant entering into a joint debt management program.
Joint Liability
A debt in the name of two or more people, each person named are equally liable for repayment of the debt.
Legal Charge
See 'Charging Order'
Mortgagor
The borrower in a mortgage.
Negative Equity
Where a mortgage and other loans held on a property is more than the property value.
Official Receiver
A court official responsible for overseeing resolutions of insolvency cases.
Poor Credit
A term applied to a borrower or application that has problems with credit, i.e. late payment, bankruptcy or County Court Judgment (CCJ).
Priority Debt
These are debts which must take priority over normal debts and credit commitments - priority debts are numerous, a few examples would be - life insurance, council tax arrears, child support agency arrears, Magistrates' Court Fines, for a full list please contact the Citizens Advice Bureau.
Repossession
The Legal process by which a defaulting borrower is deprived of their interest in a mortgages property, typically involving a forced sale of the property at a property auction.
Restriction
See - 'Caution'
Secured Loan
A loan that is secured your home - also called a 'second charge' or 'second mortgage', sometimes used to repay debt management plans.
Set Aside
Allows you to apply to the courts to have a county court judgment 'set aside' (removed) - there must be a valid and genuine reason why it is to be set aside and the courts will rule on it depending on the individual circumstances.
Sub Prime
An industry term used to describe credit impaired lenders, products or clients.
Sole Liability
A debt in just one persons name.
Statutory Demand
A formal notice requiring payment of a debt in excess of £750 within 21 days. If in default of the statutory demand then bankruptcy proceedings may be commenced without further notice.
Summons
A formal instruction requiring the recipient to appear before a judge or magistrate at court.
Term
The period of time over which loans are repaid.
Trustee
The trustee in a bankruptcy is either the insolvency practitioner or the official receiver, the trustee will take control of and sell your assets (where practical) to make payments to your creditors.
Unsecured Loan
A loan not secured on property or any other assets, these loans can typically be included in a debt management plan.
Variation Order
A variation order allows you to apply for a variation (to vary) the amount you were ordered to pay per month in regards to a county court judgment.