Glossary of Terms
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.
