Accounts Payable: Amounts owed by to a creditor for goods or services obtained by debtor.

Annual Percentage Rate (APR): The percentage of interest that you will endure over a year.

Arrears: When an individual falls behind on their minimum monthly payments.

Assets: An item of ownership which can be converted into cash value in order to pay off your debt, such as your house.

B

Bailiffs: Are employed to take your assets so that they can be sold to cover your overdue debts.

Bankruptcy: When an individual becomes legally declared insolvent as they are incapable of settling their debts.

Bankruptcy Order: The court order which declares someone as being bankrupt.

Base Rate:The lowest interest rate charged by a bank.

C

Capital: The overall amount of money/assets remaining after any liabilities have been deducted.

County Court Judgment (CCJ): When a judgment is ruled against at individual in Court, stating that they will have to pay back any debts that owe to the lender.

Credit Rating: The rating which is used by many financial companies to see if you would be a reliable, safe individual to lend credit to.

Creditors: A person or company to whom you owe money.

Current Account: A bank account which is able to offer a number of services such as cheque book and overdraft, which is most commonly used for outgoing transactions.

D

Debt: Money that is owed back to a company/person, from where it was borrowed.

Debt Consolidation: When your debt is restructured into one single affordable monthly payment.

Debt Management Plan: A repayment scheme which helps an individual manage their debts. Please contact one of our advisors to see how this could help you 0800 0481 777.

Debtor: The person who owes the debt.

Default Notice: A notice which is issued by the creditor after a previous arrangement has failed. It will inform the debtor that the company is intending to take it to the next level to recover their money.

Disposable Income: The income that is remaining to spend after all essential expenses have been made.

E

Earned Income: The amount of income which comes from employment or pensions, as opposed to any unearned such as bank interest.

F

Finance: To raise money through the sale of assets.

G

Gross Income: The amount of income that one has before any deductions.

Guarantor: In the event that an individual will be unable to meet their financial obligations, the guarantor will have to make the repayments.

I

Individual Voluntary Arrangement (IVA): When an individual comes to an agreement with their creditors, about paying a fixed amount of their debt, typically over 60 months. Any debt remaining after this time frame is usually written off.

Insolvency Practitioner (IP): The IP is legally recognised as a licensed financial expert, who will be able to deal with any Insolvency procedures, such as an IVA or bankruptcy.

Insolvent: When a person is no longer able to settle their debts when they are payable.

Interest Rate: A percentage charge which is set out on the money that you borrow.

J

Joint Liability: The legal liability that more than two people will have on any debts that they incurred together.

Judgment: A judicial ruling which is given within a court of law, which will result in an obligation by one party. An example of this is a CCJ.

L

Litigation: A legal proceeding in court, where a person or company takes legal action against another.

Loan: A money advance which is given over a period of time, where regular repayments will often follow along with an interest rate.

M

Mortgage: A loan which is offered on a property or land, usually set over a long period of time.

O

Ombudsman: An independent official which will investigate any complaints that an individual has about a financial institution.

P

Personal Loan: Loans which are given by a variety of financial institutions for your personal use.

Priority Debts: Priority is given to your mortgage, rent, secured loan, utilities, council tax etc, on the basis that if you don’t pay them, you could be at risk of losing your home or the service.

Proxy: The authority given to an individual who is able to vote and speak on behalf of the creditor.

R

Remortgage: When a previously mortgaged property is replaced by another, this might come into effect so you can get a lower interest mortgage.

Repossession: When a creditor to whom you owe a debt, that cannot be paid, can take your personal possessions to fund it.

S

Second Mortgage: When another mortgage is taken out on a property which is already mortgaged, this might be used to raise capital. A Second Mortgage usually carries a higher rate of interest.

Secured Debt: When money is borrowed against a secured asset, this could be a house or a car. If the debtor fails to keep up repayment, then the asset can be demanded as payment.

Statutory Demand: A notice which will require, within 21 days, the repayment of a debt exceeding �£750, or the debtor may face bankruptcy proceedings against them.

U

Unsecured Debt: A debt which is not secured against any asset.

Utilities: What are regarded as essential services, such as electricity.

Debt Consolidation: This means that you consolidate debt into one low monthly payment to make it easier to keep track of your finances. Debt consolidation typically happens in the form of a debt consolidation loan where to take out a new loan to pay off all of your existing debt.
However, you may not wish to take on more debt in order to pay off debt which is already unaffordable. If this is the case you may be thinking about debts management.

Debts Management: One of the most popular debt solutions which allows you to make your debts more affordable on a monthly basis without the need to take out any further credit. A debts management company, such as ourselves, will work with your creditors to negotiate lower monthly repayments to your debt that you can realistically afford after all living expenses have been taken into account. We may be able to get your interest and charges frozen but this cannot be guaranteed. Instead of worrying about multiple debt repayments made at multiple times of the month, you just make one payment to us which we will distribute between your creditors as agreed.

Individual Voluntary Arrangement (IVA): One of the more unusual debt terms which you may come across is an IVA. This is similar to a debt management plan as it allows you to reduce your payments into one but it offers you additional advantages which you cannot get with debt management. For example, an IVA is a legally binding contract which, once agreed, means your creditors cannot change their mind. You agree to repay a fixed amount over a typical period of 60 months, your creditors freeze interest and charges and any unpaid debt will be written off on completion of the IVA.

This gives you just an overview of the debt solutions available. For further explanation about the different debt terms available, contact DebtsManagement.co.uk directly.