Debt Glossary

A

Adverse Credit History
Also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history and bad credit history, is a negative credit rating. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.

B

Bailiff
Can be appointed by the County Court if a lender has issued a CCJ which hasn't been paid. A Bailiff is an official of court and has the power to seize goods and sell them at auction to settle a debt.

Bankruptcy
A legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, bankruptcy is initiated by the debtor (the bankrupt individual or organisation).

C

County Court Judgments
In England and Wales (Scotland has its own legal system), CCJs are legal decisions handed down by County Courts. Judgments for monetary sums are entered on the Register of County Court Judgments, which is checked by credit reference agencies to assess the credit-worthiness of individuals.

Charging Order
A charging order is an order from the court placed on a debtor's property (house or land) for monies owed to a lender. In basic terms, the unsecured debt becomes secured on the debtor's property.

Credit card
A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks.

Credit rating
Assesses the credit worthiness of an individual. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender the probability of the subject being able to pay back a loan. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates.

Credit history / credit report
A record of an individual's past borrowing and repaying, including information about late payments and bankruptcy. A credit reference agency is a company that provides this credit information on individual borrowers.

In the United Kingdom, the main credit reference agencies for individuals are Experian, Equifax, and Callcredit.

Creditor
A party (e.g. person, organization, company, or government) that claims that a second party owes the first party some properties or services.

D

Debtor
Or a borrower - owes money to a creditor.

Debt consolidation
Entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt Management Plan
A DMP is an informal debt repayment arrangement, available in the United Kingdom, between a debtor and their creditors.

F

Full and Final Settlement
An offer to repay a percentage of the debt, on the condition the creditor agrees to write off the rest of the debt.

H

Hire purchase
Frequently abbreviated to HP - is the legal term for a conditional sale contract. In cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase contract allows the buyer to hire the goods for a monthly rent.

I

IVA
In the United Kingdom, Individual Voluntary Arrangements (IVAs) are a formal alternative for individuals wishing to avoid petitioning for their own bankruptcy.

The aim of an IVA is to help you clear your debts at a reduced level over a fixed term, usually over a period of 5 years. Through the duration of the IVA you won't receive any further contact from your creditors, plus all interest and charges will be frozen.

M

Mortgage loans
Generally refer to a loan secured by residential property, often for the purpose of acquiring the residence. Mortgage loans may be lower priced than other forms of borrowing because the value of the property reduces risk for the lender.

N

Notice of default
A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline.

O

Overdraft
An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn"

If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

R

Remortgage
Also known as refinancing - is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.

Repossession
Repossession is a legal process that occurs when a lender obtains a court order to take possession of a property due to non payment of the mortgage.

S

Secured loan
A loan in which the borrower pledges some asset (e.g. a car) as collateral for the loan. The loan is thus secured against the collateral - in the event that the borrower defaults, the lender takes possession of the asset used as collateral and may sell it to regain the amount originally lent to the borrower.

Statutory Demand
A formal notice requiring payment of a debt within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced without further notice (Cannot be used where the debt is disputed).

Store card
A type of credit card associated with a retailer or group of retail stores which can only be for purchases from the retailers concerned.

Sequestration
The act of removing, separating or seizing anything from the possession of its owner, particularly in law, of the taking possession of property under process of law for the benefit of creditors or the state.

T

Trust Deed
The PTD is a formal arrangement that is used in Scotland where a consumer debtor grants a 'deed' in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.

Trustee
A legal term that refers to a holder of property on behalf of some other beneficiary. Can be the Offical Receiver in Bankruptcy or Insolvency Practitioner in an IVA.

U

Unsecured debt
A financial term that refers to any type of debt that is not collateralized by any specified assets in the event of default.

Unsecured loans
Loans that are not guaranteed with any asset, so that the risk of repossession does not exist. Though the lender can still take legal action in order to recover the money, such a legal process would be significantly longer and more expensive than with secured loans. Typical unsecured loans are credit card debt, bank overdrafts, and personal loans.

Glossary terms courtesy of Wikipedia
Debt Help Pros © 2006 and beyond

*** An IVA (Individual Voluntary Arrangement) is subject to acceptance. Debt write off applies to unsecured debts and on completion of an IVA. In some IVA’s up to 80% of the debt can be written off. The amount written off will depend on your circumstances, income, assets and the current write-off policy of your creditors. Levels between 25% and 80% are realistic, depending on your ability to repay.

Debt Help Pros is a trading style of Wray Marketing Solutions Incorporated Company No: BC0772883 | ICO DPN: Z2103059

At Debt Help Pros we do not give advice. On completion of our form, we will introduce you to one of our authorised debt solutions partners. We use the contact details you have given us on the form to make this introduction. A debt advisor will contact you by telephone. During that telephone call, the debt advisor will discuss your options in more detail. During this call, and other subsequent communications, you will be dealing with a debt solutions partner and not Debt Help Pros.

All solutions are subject to acceptance and eligibility. Further conditions will apply and calls are recorded for your protection. Initial advice is always free but, as commercial companies our partners do charge for on-going services. Debt Write off only applies on completion of the Insolvency Solution and details do appear on a public register. Full details will be discussed prior to entering into an agreement and alternative options may be offered, where considered to be in your best interest. Your ability to obtain credit will be affected for 6 years, even if the solution lasts for less and your assets and property could be at risk.

Fees disclosure:

All debt solutions should be very carefully considered. Debt-help-pros.com never charge for the advice we give you, but if you enter an Individual Voluntary Arrangement (IVA) or Debt Management Plan with one of our group companies, then fees will apply and these are made clear by our advisors or in the documentation you receive. Retained payment may place you further into arrears. Dept-help-pros.com partners all comply with the Financial Conduct Authority Code of Conduct and you have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.


Impartial Information

You can get FREE impartial advice on finances from the Governments Money Advice Service