Glossary

Administration Order
A County Court can act on your behalf to administer payments to all your creditors. The court will stop creditors taking further action and applying further interest.

Attachment of Earnings Order
If you fail to pay money as ordered by a County Court the creditor can apply to the court to have the money removed from your wages

Bailiffs
Bailiffs recover money that people owe their clients. Bailiffs do not generally have the right to force entry into your home. However, they can gain 'peaceful entry' if you let them in, or they enter through a closed but unlocked door or open window.

Bankruptcy
You are declared bankrupt when you have insufficient funds to pay your creditors. You or one of your creditors can file for bankruptcy . Any assets will be sold to repay debts

County Court Claim
Formal document sent to inform you that a creditor has begun legal proceedings against you. If you do not respond within 14 days a County Court Judgement (CCJ) will be registered by default

County Court Judgement
Following a County Court Claim, if the figure is not disputed, or the case is unsuccessfully defended, the court will enter a judgement. This is usually for payment by installment or the entire sum to be paid immediately. A judgement may be set aside, varied and suspended on application to the court. Judgements are registered publicly with Registry Trust and held for six years.

Credit Reference Agency
A private company that keeps computer records about the use of credit by individuals. When someone applies for credit, the credit company will check with the agency about your previous credit history before deciding whether offer the credit.

Credit Repair
A number of organisations have claimed that, for a fee, they can remove County Court Judgements, so making it easier for people to obtain credit. This is normally done by advising people to apply to have the judgement set aside on (usually) false grounds. A number of credit repair companies have been prosecuted and one proprietor was jailed for conspiracy to defraud the public.

Debt Management Plan (DMP)
Allows you to make reduced repayments to your lenders (creditors) over a number of years. Payments are made until the debt is cleared in full or until you are able to make the full repayments again. The repayments are based on what you can afford after a realistic income and expenditure has been drawn up.

Deduction from Earnings
An order made by the Child Support Agency to make deductions for maintenance. No court order is necessary (unlike an Attachment of Earnings Order).

Default Notice
Must be issued by a creditor before he can start legal action to recover a debt. It states the amount of money owing and the amount required from the debtor to put things right. It asks for payment in full in seven days. If the seven days pass without payment, the creditor can take court action.

Individual Voluntary Arrangement
An alternative to bankruptcy. An IVA is a formal proposal, made on behalf of the debtor by a registered insolvency practitioner, to pay creditors part or all of a debt over a set period of time.

Joint and Several Liability
If more than one person enters into a credit agreement then both are liable for the full amount. For example, after divorce or separation, both parties can be pursued for the outstanding amount. This also applies to rent arrears on joint tenancies, arrears on joint mortgages, Council Tax payment and water rates on properties that have been jointly occupied.

Liability Order
If you fail to pay your Council Tax, your local authority can apply to the Magistrates Court for a Liability Order. The Order gives the council extra powers to enforce collection of the money.

Non-priority Creditors
Non-payments to these creditors (sometimes known as secondary creditors) would incur less severe consequences than the non-payment of priority creditors (see below).

Priority Creditors
Those where non-payment could result in loss of property, essential services or imprisonment, e.g. mortgage, rent, gas, water, electricity, Council Tax, court fines and maintenance.
Secured Lending A loan where security is given by the person borrowing (the security is usually property). If you fail to repay a secured loan the property maybe repossessed. These debts take priority over unsecured lending.

Statutory Demand
A formal legal document requiring a debtor to pay off an outstanding debt or secure it against property otherwise the creditor will bankrupt the debtor. Ignoring a Statutory Demand allows the creditor to start bankruptcy proceedings.

Surplus Income
This is the amount of money left over after paying essential expenditure (such as mortgage, housekeeping etc) but before making any credit repayments. If this is a negative amount, it is known as a deficit.

Time Order
Allows a County Court to make changes to the terms of a regulated agreement, if it appears to be just. The court can reduce the repayment rate and the interest rate. Time Orders are normally only made where there is a temporary financial difficulty and if you are likely to be able to return to making full contractual payments.

Unsecured Lending
Is not secured on a property by way of a legal charge and where the rights of the creditor extend only to recovering any money owed.