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Get ready to
jargon bust
the BacktoBlack

Welcome to knowledge central.

Don’t know your IVA from your Trust Deed? Don’t worry,
we know how you feel. All these fancy debt words are hard to keep
track of. So to make things easier for you, we’ve put together
a BacktoBlack Debtionary to explain all that financial jargon!
That way you’ll be up to speed, and ready for that
pub quiz in no time at all.



Administration Order

This may apply if you have at least one County Court Judgment (CCJ) against you and your total debts aren’t over £5,000. It allows a County Court to handle (in other words, administer) your payments to all your creditors. The way it works is, you make ONE payment to the court, then the court splits this between ALL creditors according to how much you owe. Good news! When an Order is in force, your creditors can’t hassle you or take any more enforcement action. Plus, interest is stopped! That means the amount you owe will decrease – not grow.


This describes the debt that builds up when you miss payments. Arrears on your mortgage, rent or council tax (i.e. your household bills) have very serious implications, so these bills must be paid immediately. Arrears can build up if you don’t keep up with your payments on any unsecured debts, mounting up the more you miss. You’ll have to pay extra on top of your normal payments until you’ve cleared your arrears and are up to date.


These are the things you own that have monetary value, like your home, car, stocks, shares, antiques and savings etc.


This means the sale or transfer of a contract or agreement by one company to another.

Assignment Notice

This tells you when a debt has been assigned (sold) to another company. They have to give you an Assignment Notice by law, under s136 of the Law of Property Act 1925, so you know who to contact and who you’re dealing with.

Attachment of Earnings

This is an order given by a court saying that your debt repayments should be taken directly from your income at source, e.g. taking money directly from your wages. It can happen if you don’t pay up as ordered in a County Court Judgement (CCJ): your creditor can ask the court to have the money taken from your wages. The court decides what is a reasonable amount for you to pay each month. For Council Tax debts, there’s a similar process with the Magistrates Court.

Attachment of Benefits

This is quite like Attachment of Earnings. If you don’t make the repayments once a County Court Judgement (CCJ) has been made, the council can reduce your benefit payments. It’s at the rate of 5% of the personal allowance for a single claimant aged 25 and above. The reduction continues until the debt is repaid.



These people are hired mainly by courts to enter into your home and take away things to sell at an auction. It’s usually a last resort, used when you haven’t kept to the terms of a CCJ. The money raised at the auction covers the debt you owe to a lender.

Balloon Payment

This is a lump sum payment (bigger than the monthly payment) on a hire purchase or conditional sale agreement, once you’ve made some monthly payments.


A company that looks after people’s money. When they lend out money they always ask for it back.


This is a legal process that writes off all your debts (possibly with a few exceptions). Either you, or one of your creditors can ask the court to make you bankrupt. Your debt is usually dealt with or written off after two to three years, but if there’s any equity in your home or any other assets, these will usually be sold to repay debts. This means you could be made homeless when you go bankrupt.

Check out our bankruptcy debt solution.

Bankruptcy order

The name for a court order that makes you bankrupt.

Bankruptcy petition

This formal document is given by you or by a creditor to a court to ask (petition) for a bankruptcy order.


CCA 1974

This stands for Consumer Credit Act 1974. It’s the act of parliament that regulates credit in England and Wales, and there are other various regulations (mainly published in 1983) and the CCA 2006 which are also relevant.

CCA 2006

Consumer Credit Act 2006 – this amended the CCA 1974.

Charging Order

This is when a court places an order on a property so when it’s sold, the first part of the profit pays off an outstanding debt. It’s like turning an unsecured loan into a secured loan. When one’s issued, it’s noted on the property deeds. It’s allowed under the Charging Orders Act 1979 when a creditor has a high court judgment or county court judgment, and when these payments have defaulted.

Charge for Payment

This document is served in Scotland when you have been ordered to pay an outstanding debt within a given timescale. It’s like a County Court Judgment (CCJ) in England or Wales.


This means simply lending you money.

Credit Agreement

The agreement (or in other words, contract) between a creditor and debtor to lend money.

Credit Card

This is way of lending you money, when you’re pretty much free to use it whenever you want, with whoever accepts that credit card. It’s usually with big organisations like MasterCard or Visa.


The person or organisation (normally a bank, building society or credit card company) lending the money to you. When you’re behind with payments on household bills, your creditor could be the local council or a power company, as they have effectively let you borrow their money as you owe them.


This stands for Credit Reference Agency, and they’re one of several companies who keep records of debtors' history of payments.

Credit Record

The name given to the information held about debtors by Credit Reference Agencies.

Credit File

A file about your financial history which is held by authorised companies, with details about when you’ve applied for credit, and the credit you’ve had over recent years.

County Court Judgment

Also known as CCJ, is a final decision (or a ‘judgement’) made by the court about you making payments for a debt you owe. It happens when you haven’t kept to your original agreement with the lender and when you haven’t tried to agree on how to repay your debt. It’s why making efforts to sort things out with your debtor first is so important.

Contractual Payments

These are the payments you agreed to pay each month when you took out the original credit agreement. By not making your contractual payments, arrears can build up, affecting your credit rating.

Company Voluntary Arrangement

This is like an Individual Voluntary Arrangement (IVA) but for businesses, getting your creditor’s agreement on a way to tackle the debt so that your business can carry on trading.

Certificate Of Satisfaction

This is basically a receipt from the court proving that you’ve paid a CCJ or Attachment of Earnings. To get one you have to pay a £10 fee.


Data controller

The person nominated by a company to look after all the personal data. Every company needs to have a data controller, to stick within Data Protection Act 1998.

Debit Card

This handy bank card lets you withdraw money from a cashpoint or pay for things, when the money comes straight out of your account. It’s completely different from a credit card as you don’t borrow any money, and it’s not regulated by the CCA 1974.


The name for money you’ve borrowed.


This stands for a debt collection agency which ‘collects’ defaulted debts. They can work for a creditor or they can have the debt ‘assigned’ to them, which makes them the new creditor.


The word that’s used for you when you owe money.


The word that shows that a debt isn’t healthy because repayments have been missed.

Default Notice

This legal process needs to happen (under s87 of the CCA1974) before a creditor can take certain actions to enforce a credit agreement.


This stands for Debt Management Plan. It’s a plan agreed with your creditors for paying off your debts by more affordable instalments.


Earnings Arrestment

The Scottish version of an Attachment of Earnings Order, where the court can order money to be taken straight from your wages to repay an outstanding debt.


This is the difference between the value of your mortgage and your home’s current market value. It’s like money locked up in your bricks and mortar. ‘Negative equity’ can happen when loans secured on your home add up to more than the market value.

Ex Parte

This term describes the situation when legal action is taken by one person in the absence of / without representation by / without informing the other party or person.


Final Discharge

When you’ve gone bankrupt, at the point when you’re free form your debt, this document will be posted to you showing the end of your bankruptcy and proving you’re debt-free.


This is when someone deliberately misleads someone else or an organisation with information they know isn’t true. It’s usually done to falsely gain a financial advantage.



Sometimes, with a clear understanding of what’s involved, someone may be willing to guarantee (in other words, be a guarantor) that your payments will be made. So the creditor lending the money is assured that the guarantor will pay if you can’t. It’s a legal agreement and the consequences are very serious if you can’t make your repayments.


An agreement made by one person to pay the creditor on behalf of another, should they be unable to make their payments.



Causing distress by harassment is actually a criminal offence, as defined by the Protection From Harassment Act 1997.


This is an agreement between the company leasing goods and the customer. At the end of the lease period, ownership passes to the customer.

Hire-purchase agreement

The name of an agreement to start a hire-purchase. It’s regulated by the Consumer Credit Act 1974.


Income Payments Order

During bankruptcy, if the officials (the Official Receiver or Trustee) believe the debtor can afford to make a regular contribution, they can apply for an Income Payments Order. The payments are shared amongst the creditors.

Informal Arrangement

This means directly arranging reduced payments with your creditors without the help of a more formal third party.


This takes place when there aren’t enough funds to meet debts as and when they’re due.

Insolvency Practitioner

A specialist in insolvency who is recognised by the appropriate legal body. You’ll have peace of mind knowing they’re qualified to handle your insolvency and take steps on your behalf to sort out your debts.


This increases the overall amount you owe by adding a percentage of the loan (%) as a type of charge. Interest rates can vary hugely between different lenders. High interest rates are one reason why a repayment can become unaffordable, when the amount you owe builds and builds.

IVA (Individual Voluntary Arrangement)

This is a type of formal arrangement with your creditors, normally lasting 5 years. You make an affordable payment every month and the rest of the debt is wiped out (or ‘discharged’) at the end, so long as you make all your payments. All interest and charges are stopped. It is a private and legally binding arrangement for people with larger debts.

Check out our IVA debt solution.


Joint and Several Liability

This is about sharing a responsibility (in other words, a liability). When you and your partner take out a loan or overdraft (a credit agreement) in both your names, then you’re both liable for the full amount of any debt. So if one of you fails to repay the debt, which can happen after separation and divorce, then they’d ask the other person for payment of the full amount. Two important things to remember about this. 1) One responsible is still responsible for repaying the FULL amount, not just ‘their’ half. 2) This doesn’t apply to credit cards, where normally only one person is the account holder, even when there are two cards.




Someone or some company who lends you money. It’s usually a bank, building society or credit card company.


The term levy is used when a bailiff takes payment from you or your goods to raise the sum on the cost of the warrant and other associated costs. They have to give you notice about how much levy will be charged 7 days before the bailiffs arrive.

Liabilities Orders

If you don’t pay your council tax, you’ll receive a liability order 28 days after the payment was due by the local court. A liability order is issued so that the council can collect your arrears directly from your wages or from your benefits. That means your earnings and income will be lower while your arrears are being repaid.


When a business or a company goes ‘into liquidation’, either by termination or by bankruptcy, there’s a winding up of affairs. This means that all company assets like equipment and buildings are sold off, and the resulting money goes to pay the creditors. If there’s anything left, this is shared between the shareholders.

Letter before action or Letter of claim

You must be sent one of these letters before any litigation is started (according to the Preaction Protocols Practice) against you. The letter will explain the complaint and give you 28 days to write back asking for more information or trying to resolve the issue.




Official Receiver

If you go bankrupt, the person in this post (or the Trustee) will handle the administration for you. They’ll interview you and decide whether any of the things you own (your assets) should be sold to help put things right with your creditors.



Means "in proportion to." For example, if you owe a credit card £100 per month and a bank £900 per month but have only £100 to pay them, the pro-rata payments would be £10 and £90.

Property Restriction

During an IVA a creditor may put a ‘restriction’ on your property, which will only be in force during the time of the arrangement. During this time, the restriction won’t stop you selling your home but it does mean you could lose equity if it’s greater than the debt.

Proof Of Debt Form

If you reach an agreement with your creditors using an IVA or Trust Deed, or you go bankrupt, your creditor can use a Proof of debt form to show the debt and state their claim for money. (See also Assignment Notice.)


When you do something ‘by proxy’, what it means is that someone else does it for you. Likewise, it’s rare for a creditor to come to a creditors’ meeting – they usually send a proxy to attend and vote for them.



Right To Offset

In a situation where you’ve fallen behind with payments to a credit card or loan, and you also have a current account with them, they can use the ‘Right to offset’. This means that, without your permission, they can take funds from your current account to bring your debt repayments up-to-date. The same applies when you have an overdraft and savings with the same financial provider.


Secured Debt

In certain situations you might borrow money that’s ‘secured’ on one of your assets, like your house, car or even furniture. This means that if you don’t stick to the terms of the agreement and fall into arrears, your things are at risk. The creditor can demand the sale or return of the asset that the borrowed money was secured against.

Secured Loan

A loan taken out secured on property (such as a house or car for example). If the debtor defaults, then the creditor can take possession of the security to repay the loan.

Statutory Demand

This legal document demands that you must settle an outstanding debt in instalments or as a lump sum, or to secure it against a property. You get 21 days to sort this out or a bankruptcy petition may be issued.

Subject Access Request

When a company or any organisation holds information (data) about you, you can make a request to their data controller to see that information (under section 7 of the Data Protection Act 1998). Equally, anyone else can make a request for information about you in the same way.

Surplus Income

This phrase is important when you’re working out a budget. It means the amount of money you’re left with, after you subtract all your living expenses (such as housing costs, your food, any vital travel, clothing, insurance etc.) from all your sources of income (including your wages, pensions, benefits etc). The amount left is the ‘surplus income’ available to pay your creditors.


TCC or Total Cost of Credit

When you’re borrowing money, the TCC is the sum of all arrangement fees and interest added to your loan.

Time Orders

This can very useful if you’re trying to sort out your debts and your creditor won’t freeze your interest costs or agree to your new lower payments. Time Orders allows the court to change your consumer credit agreement to help find a way forwards.

Token Payments

When you can’t afford to make your usual repayments, it can help to make small ‘token’ payments to each creditor. It could be only £1 each per month, but it’s better to send this ‘token payment’ than send nothing at all. It shows your commitment to sorting things out.

Transactions at an Undervalue

This describes a complex situation during bankruptcy proceedings. In essence, it keeps things fair and square. Sometimes, before going bankrupt, someone tries to do something they shouldn’t, such as transfer a valuable asset (like their house, car or something expensive) into the name of a family member or friend, hoping to rule it out from the bankruptcy estate. The Official Receiver or Trustee can scrutinise the debtor’s previous finances for up to 10 years before the bankruptcy, to see if it anything like this has happened, transferring something valuable for less than its market value. For example, a debtor may undersell their property to a friend for £1, then goes bankrupt 8 years later in the hope of regaining the property once the bankruptcy had been discharged. In this case, the Official Receiver or Trustee can apply to have the property sold and any equity realised for the benefit of the creditors.


For setting up an IVA or during bankruptcy, a trustee can be either the Official Receiver or the Insolvency Practitioner. As trustee they will control the assets.


Unsecured Loan / Debt

A loan taken out with no security, meaning it’s not connected to any of your assets. (Compare to a Secured Loan)


Variation Order

This can be useful when a CCJ has been put in place but because of changing circumstances you can't afford to make the payments. You can apply to vary the payments using the form N245.


Warrant of Execution

If you have a CCJ against you but you haven’t made the payments, and you haven’t applied for a variation order to adjust your payment, then a warrant of execution may be issued. The result is that bailiffs can go to your property and take goods to the same value as the debt you owe.


Windfalls are any assets (money or things) that come about for you during the time you have an IVA or are bankrupt. These will go towards repaying the debt, and mean you can be debt-free faster.




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