Glossary

Accountant in Bankruptcy - the trustee appointed under sequestration in Scotland

Acknowledgement of Service - this accompanies a claim form which you may receive if you lender is seeking a County Court Judgement against you. If you wish to defend the claim, this form gives you an extra 14 days in which you can prepare your defence.

Admission Form - If you are not defending a County Court claim, but are offering partial repayment or payment by instalments, you would need to complete an admission form and provide details of income and outgoings.

Bailiff - a bailiff is somebody legally authorised to collect debt on behalf of a lender. There are however different types of bailiffs, some of whom are appointed by the court.

Bankruptcy - a legal process where you are declared insolvent and your assets are transferred to a trustee

Claim Form - if a lender is seeking a County Court Judgement against you it will complete a claim form setting out the details of the amounts owed and a copy of this will be sent to you by the County Court.

Credit Agreement - this is the document that sets out the terms under which you have been granted credit by a lender. It shows what payments you are required to make, when the payments are due, the interest rate under the agreement, any charges that can be made such as those for late or missed payments and other legal matters.

Credit Record - this is the information that is held by the Credit Reference Agencies about your credit history, including the number of credit accounts you hold, details of the payments you have made, the amount of credit outstanding, and whether you have any County Court Judgements or Defaults recorded. It will also show whether or not you are recorded on the Electoral Roll, previous address information, and any people with whom you hold joint credit.

Credit Reference Agency - a credit reference agency is an independent company that provides lenders with details of how you have operated your credit accounts. Lenders use this information to help them make decisions about who to lend money to. There are 3 main credit reference agencies in the UK, Call Credit, Equifax and Experian.

Charging Order - a charging order can be given by a Court if a County Court Judgement has been granted and you have failed to make payments. It gives the lender security for the debt; in other words, the debt would become "secured" like a mortgage on your property. If the house is sold the proceeds will be used to repay the debt before you receive anything.

County Court Judgement - a lender can apply to the County Court and ask it to produce an order to enforce the debt. This is known as a County Court Judgement or CCJ. If the amount of the judgement is paid within 1 month, then you can obtain a "certificate of cancellation" from the Court and the information will be removed from your credit record. If you do not pay the amount within 1 month it will remain on your credit record for 6 years.

Creditor - this is the person you owe money to and is generally the lender - the firm that lent the money to you. In some cases, it could be a debt collection agency acting on behalf of the lender.

Debt Administration Order - You can apply to the court for an Administration Order if you owe less than £5,000 to at least 2 creditors and have a CCJ registered against you that you can't afford to pay in full.
The court makes an order for payment based on what you can afford. You make the payments to the court and the court distributes the payments to your creditors.

Debt Collection Agency - sometimes a lender will arrange for another firm to try to collect the money you owe, this is known as a Debt Collection Agency.

Debt Management Plan - this is an informal agreement where you make one monthly payment to a debt management company which is then distributed to your creditors. The debt management company will look to get the creditor to stop or reduce interest and charges on your account.

Debt Relief Order - a new, simpler, quicker and cheaper form of bankruptcy. However, you have to meet certain minimum requirements to be eligible. The mains ones are that the total of your unsecured debts must be less than £15,000, your total assets must be less than £300 and your disposal income must be less than £50 per month.

Default Notice -lenders are required to send you a default notice before taking certain action on your account. A default notice tells you that you have not met the terms of the credit agreement by failing to make the required payments. It will give you a timescale, a minimum of 14 days, during which you can take action to resolve this. Usually, the action needed is to pay the amounts outstanding. The lender cannot take further action against you within this 14 day period. A default notice will stay on your credit record for a period of 6 years.

Defence Form -if you wish to defend a claim being made against you in conjunction with a County Court Judgement, you would need to complete this form.

Financial Ombudsman Service -this is an independent body which was set up by the Government to deal with complaints about certain credit matters if you are not satisfied by the way the lender or credit broker dealt with your complaint.

Individual Voluntary Arrangement -an IVA is a legally-binding agreement between you and your creditors. You usually make one payment each month which is distributed to your creditors. The arrangement normally lasts for 5 years and at the end of this period your debts are "settled".

Insolvency Practitioner -a licensed person who is appointed in relation to insolvency proceedings such as bankruptcy or an IVA.

Loan Sharks -Loan sharks are illegal lenders. They have not been granted or have not applied for a licence through the Office of Fair Trading. If you borrow money from them, the chances are you'll be charged a massive amount of interest and they may threaten or frighten you if you can't meet your payments.

Legal Action -a lender may look to take action in the courts to recover money due under a credit agreement - this is legal action. Any action will be taken in the civil courts. Failure to pay debts is not a criminal offence and criminal proceedings cannot be taken.

Office of Fair Trading -the OFT or Office of Fair Trading is the government department that has responsibility for supervising firms that offer services in relation to credit.

Official Receiver -an officer of the court who is appointed to investigate and manage the estate of a person in bankruptcy

Priority Debts - these are debts that can have serious consequences if you don't pay them and it is very important that you do all you can to pay these. These include:

• Rent, mortgages or other debts that are secured against property (these include hire purchase agreements) - this is because if you are unable to meet repayments on your mortgage or secured debts, your home may be at risk and it can result in your home being repossessed. Likewise if you can't pay your rent or a car lease, it can result in the loss of your rented property or car.
• Court fines - again if you don't make these payments then you could be in breach of a court order and can risk imprisonment.
• Council tax - non-payment of your council tax bill can result in court action and in some cases, imprisonment.
• Gas and electricity - your supply can be disconnected if you are unable to pay.
• Maintenance or child support
• Income Tax, National Insurance, VAT - non-payment can result in court action and in some cases, imprisonment.
• TV licence - you can be fined or imprisoned if you don't hold a TV licence when you're required to.

Repossession - the taking of property, e.g. a home, against which a debt is secured.

Secured - a secured debt is one where the lender has a legal charge over your property so that if you don't repay the debt the lender has a claim on the proceeds if the property is sold. The lender can also apply for your property to be repossessed.

Sensitive Case - a sensitive case is one where the lender has received reasonable evidence that an individual has:

• mental health issues;
• serious health issues or a medical condition that limits his ability to cope with day to day living; or
• suffered a recent death in the family.

Lenders are required to deal with these cases sympathetically.

Sequestration - in simple terms, this is the Scottish equivalent of Bankruptcy.

Statute Barred Debt - if a lender allows time to pass without receiving any payment it may mean that the lender cannot take action to enforce the debt. Under the Limitations Act 1980 the time limit is 6 years and this 6 year period generally runs from the date that the lender last contacted you to request payment.

If you acknowledge the debt in writing or make a part payment within the original 6 years, then the time limits start to run again from the date of acknowledgement or the date of payment.

Statutory Demands - a statutory demand may be issued by a lender and it gives you 21 days warning to pay the debt. After the statutory demand has run its course the lender can petition for your bankruptcy. .

Time Orders - a time order is an order granted by the Court to set out the action that should be taken on a credit agreement which is regulated under the Consumer Credit Act 1974. You can apply to the Court for a time order and if granted, the order could allow you to pay the amount outstanding in instalments that are set by the court.

The lender cannot take any default action in relation to the debt during the period specified in any time order.

Trust Deed - a Scottish Voluntary Arrangement, but not to be confused with an IVA in England and Wales.

Undischarged Bankrupt - this is an individual who has been made bankrupt but who has not yet been discharged.

Unsecured - these are debts that are not secured against property, such as credit cards, store cards, bank overdrafts, etc. If you don't repay the debt the lender can't automatically take your property. However, under certain circumstances they can apply to the court for a charging order.