Debt Glossary of Terms

Glossary of Common Debt Terms

The debt management industry makes use of several unique terms. The most common are listed below and a definition is provided for each one. While reading the information on our site, refer to the glossary for definitions of unfamiliar terms. If a term is not listed on this page, contact us for a detailed explanation. To view a definition, click on a term and it will expand. You may also use the search box at the top of the page to find pages pertaining to particular terms.

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Administration Orders

If debts do not exceed £5,000 and one or more County Court Judgments have been filed, the individual might qualify for an Administration Order. With this debt solution, the County Court assumes authority for administering payments to creditors. A single payment covering all debts is issued by the debtor. The court provides each creditor with a portion of the payment based on amount it is owed. With an Administration Order in place, creditors stop interest from accruing and are not permitted to take further action.


When an individual does not make contracted payments for living expenses. Failure to make payments for mortgage, rent, or council taxes can result in arrears that should be paid immediately. Failing to make payments on unsecured debts can also put an individual into arrears. As payments continue to be missed, arrears accumulate. Until all arrears are cleared, regular payments and the additional amount must be made.


An owned item with monetary value such as stock, shares, property, antiques, savings, or a car.


When a debt is sold to another organization by a creditor. Assignment is not the same as the creditor handing a debt over to a collection firm who will act on its behalf.

Attachment of Benefits

If repayments are not made after a County Court Judgment is issued, the council may deduct this money from benefits. Five percent of a personal allowance for a single person who is at least 25 years old is the permitted deduction. The Attachment of Benefits will continue until the debt is cleared.

Attachment of Earnings

If repayments ordered by a County Court Judgment are not made, the creditor may petition the court for a deduction from wages received by the debtor. An Attachment of Earnings must be approved by a court, which also determines the amount of the deduction. Attachment of Earnings pertaining to council tax are handled by the Magistrates’ Court.



A bailiff works for the court and is responsible for removing items from the residences of debtors. These items are sold at auction to cover debts owed under CCJs that have not been paid according to their terms.

Balloon Payment

A lump sum payment following monthly payments made under a hire purchase or conditional sale agreement.


A legal process that writes off debts, with some exceptions. A bankruptcy petition may be made by a creditor or debtor. Covered debts are typically discharged after two or three years. If the bankrupt individual has any equity in assets such as property, these items can be sold to repay debts included in the bankruptcy filing.


Certificate of Satisfaction

A certificate issued by a court verifying that repayment has been made as outlined in a County Court Judgment or Attachment of Earnings.

Charge for Payment

This is the Scottish equivalent to a County Court Judgment in England and Wales. The document orders an individual to repay a stipulated debt within a certain period.

Charging Order

The Charging Orders Act 1979 stipulates that creditors with a High Court Judgment or County Court Judgment may use assets held by a debtor to secure a debt. A Charging Order can only be issued following debtor default on judgment payments.

Company Voluntary Arrangement (CVA)

A CVA is the business version of an Individual Voluntary Arrangement. This voluntary agreement for debt repayment must be approved by creditors. A business with a CVA is permitted to continue trading.

Contractual Payments

These are the payments agreed to when a credit agreement is signed. If contractual payments are not made to creditors by a consumer, arrears may develop, affecting the credit rating of the individual.

County Court Judgment (CCJ)

A judgment issued by a county court that requires an individual to make debt payments that were not made according to the credit agreement with the lender and for which a repayment agreement was not arranged.

Court Claim Form

A formal document indicating that legal proceedings have been initiated by a creditor. After receiving this notification, a debtor has a 14-day response window. If a response is not provided, a judgment is registered by default. An order is then issued for immediate repayment of the full balance.

Credit File

A file that contains the financial history of a consumer. It includes applications for credit and the amount of credit utilized.


An individual or organization (usually a building society, bank, or credit card company) that serves as a lender for another individual. The term “lender” is used interchangeably with creditor.


Debt Collection Agency

An organization that contracts with a creditor or purchases debt. This organization attempts to collect the outstanding balance but does not have authority equivalent to that of a bailiff.


An individual in debt who is required to repay outstanding balances to creditors.

Default Notice

A notice issued by a creditor and sent when a financial agreement between the creditor and a debtor fails because the debtor has not complied with the terms of the agreement. This notice is sent to indicate that the creditor plans to take recovery action for money due.


When expenses are higher than income. A deficit can be addressed by reducing expenses or increasing income.


An individual who does not receive income and relies on someone else for payment of living expenses. Homemakers and children are examples of dependents.


The right of a property owner to recoup rent arrears by selling items owned by the tenant.


Earnings Arrestment

The Scottish version of the Attachment of Earnings. It occurs when the Scottish court orders wage deductions from a debtor to repay a debt.


The difference between current market value and mortgage balance for a property. If the loan balance secured by the property exceeds market value, the situation is called negative equity.

Ex parte

This translates to “without attendance” and pertains to applications submitted to a court without an in-person appearance by the applicant.


Final Discharge

The document issued to signify the end of a bankruptcy. A final discharge serves as official verification of the conclusion of the bankruptcy and indicates that the covered individual is now debt-free.


Offering false information to deceive someone deliberately to gain a specific advantage.



Assurance made to a creditor by a third party, referred to as a guarantor, that repayments will be made by a debtor. The guarantor is considered liable for debt payments not made by the debtor.


Hire Purchase

Pre-arranged purchase of an asset that allows the purchaser to keep the asset if the agreed payments are made. Once full repayment is issued, the asset becomes property of the purchaser.


Income Payments Order

What is applied for by the official receiver or trustee during bankruptcy if the individual believes that the bankrupt individual can afford to make regular financial contributions. Upon approval of the order, the debtor must begin making designated payments that are distributed to covered creditors.

Informal Arrangement

When a debtor negotiates reduced payments for debts directly with creditors, without involving a third party.


Not being able to repay debts when these are due or not having enough money to make debt payments.

Insolvency Practitioner (IP)

An individual authorized by the relevant board to handle an insolvency.


Joint & Several Liability

When two people take a credit agreement, both are deemed liable for the debt. If one person does not repay this debt, the creditor could request that the other party repay the balance, not just one-half of it. A loan or overdraft may be provided to two individuals jointly but a credit card usually is not. Though two cards may be issued and feature different names, only one person typically serves in the account holder role.



An individual or organization (usually a building society, bank, or credit card company) that lends money. The term “creditor” is used interchangeably with lender.


Payment or retrieval of assets to cover all costs associated with a warrant. A notice regarding a levy is usually provided seven days prior to the bailiff arriving at the property of the individual.

Liabilities Order

Once a council tax payment is 28 days late, the relevant council files a complaint with the Magistrates’ Court. A summons is then issued for a hearing determining issuance of a Liability Order. The Liability Order represents notification by the court that the council tax amount reflected on the summons is outstanding. Arrears may be arranged to be repaid through wage or benefits deductions, as determined by authorities.


Sometimes referred to as winding up, this takes place when a business or company is terminated or made bankrupt and its assets are sold, with creditors being repaid by the proceeds. Shareholders receive any remaining money.


Official Receiver

Also referred to as a Trustee, this is the bankruptcy administrator. This person interviews the individual in bankruptcy and determines whether assets can be sold to pay creditors what they are due.


Proof of Debt Form

A form provided by a creditor that claims money owed by a person filing for an Individual Voluntary Arrangement or bankruptcy.

Property Restriction

A creditor included in an Individual Voluntary Arrangement may issue a restriction on property owned by a debtor. The restriction typically applies only for the duration of the IVA period.


This translates to “in proportion to” and it represents a payment to a single creditor in relation to total repayment issued by the debtor.


An individual designated by a creditor to participate in a meeting of creditors and vote on behalf of the company.



Right to Off-Set

An individual may have a current account with a creditor and a credit card account or loan that is in arrears with the organization. Under the Right to Off-Set, the creditor may repay the arrears with money available in the current account, without getting permission from the account holder.


Secured Debt

Borrowed money that is guaranteed by an asset like property or a car. Failure to adhere to payment terms may result in the lender returning or selling the securing asset to recover money owed.

Statutory Demand

Legal document requiring a debtor to make installment or a lump sum payment for debt or to secure debt with an asset like property.

Surplus Income

Sometimes referred to as available surplus, it is the sum remaining after deducting living expenses from income. Surplus income represents the money available to creditors.


Time Order

Document permitting alteration of a consumer credit agreement by the court. A Time Order proves beneficial when a creditor refuses to freeze interest or accept proposed debt payments.

Token Payment

When an individual provides a smaller payment to a creditor in lieu of paying the agreed amount. The thought is that making a small payment is better than not paying anything.

Transactions at an undervalue

In an attempt to exclude an asset such as property or a vehicle from the estate, a debtor may transfer the item to another person prior to petitioning for bankruptcy. The official Receiver or Trustee is permitted to review debtor financial records from a maximum of ten years prior to the bankruptcy. This enables the Official Receiver or Trustee to determine whether any assets were transferred for less than their market value. This party can apply for the sale of such assets, with the equity being applied to creditor repayment.


The Official Receiver or Insolvency Practitioner controlling sales of assets during an Individual Voluntary Arrangement or bankruptcy.


Unsecured Debt

Loan, store card, catalog, or credit card debt not guaranteed by an asset.


Variation Order

Application to alter County Court Judgment payments when an unexpected situation renders the debtor unable to afford the agreed payments.


Warrant of Arrest

Document that orders the arrest of an individual by police. The individual may be offered bail and issued a court date or held in custody until a judge hears the case.

Warrant of Execution

Document stipulating that assets of the debtor may be acquired by a bailiff and sold to repay debt when a County Court Judgment has not been paid and a Variation Order is not in place.


An asset acquired by an individual during an Individual Voluntary Arrangement or bankruptcy. This asset is sold and proceeds are used to repay covered debts.