An administration order is a court order, through which you can make one payment to the court who will then distribute payments to the people you owe money to. To apply for an administration order you must have; • Less than £5k debt • At least 2 creditors • At least one CCJ against one of your debts • No licensed insolvency practitioner involved
An attachment of earnings means the money you owe to someone is deducted from your wages before you are paid. It is an order made by the court if you do not meet the repayment terms of a County Court Judgement (CCJ). Attachment of earnings continues until the debt is repaid in full. If the amount of repayment is too high you speak to your local court about applying for a reduction in the repayment.
A bailiff is appointed on behalf of someone you owe money to so to collect repayment. There are different types of bailiff – county court, certificated and private bailiffs. They have different powers and can be used to collect different types of debt. What can bailiffs do? • Visit your home to collect payment. • Enter your property through an open door or window to seize goods as a form of repayment. • Agree repayment terms with you. • Charge fees for visiting your property to collect money. What can bailiffs not do? • Take essential items such as clothing, bedding, cookers, fridges, most furniture and the 'tools of your trade'. • Force entry into your property unless the money is owed HMRC or is a court fine. How can you stop bailiffs visiting your house? • If the money owed has a CCJ attached you can speak to your local court about payment arrangements for the debt.
Bankruptcy is a serious debt solution that should only be considered as a last resort. If you are unable to repay anything towards the money you owe you can petition for your own bankruptcy. Similarly someone you owe money to can petition for your bankruptcy if you don’t make repayments to them and they have either already served a statutory demand or received a nil return from bailiffs. In bankruptcy a trustee is assigned to investigate your circumstances and decide what you should pay towards the money you owe. This can include sale of any assets you have such as a house or car and repayments taken directly from your wages. For people who work in a profession or regulated position bankruptcy could affect your employment.
A charging order means the money you owe becomes a secured loan against your property. It is likely you will be asked to make repayments to the debt in the same way you have to pay your mortgage. Failure to make repayments to a charging order could mean your property is at risk of repossession. A charging order can only be made after a court hearing has taken place. You should attend this hearing and advise the court of any objections you have to the order being made.
A County Court Judgement or CCJ is an ‘order to pay’ made by the court. It is the first form of action taken by someone whom you owe money to. Failure to pay or come to repayment arrangements for a CCJ is likely to result in further legal action is taken against you. This can include an attachment of earnings, charging order or bankruptcy.
A credit report is a tool used by companies to decide on your credit worthiness. Default notices, CCJ’s and formal proceedings will be lodged with credit report agencies such as Experian, Equifax and Call Credit and will stay on your credit file for six years (unless the creditor authorises it to be removed sooner). A credit rating or score is specific to an individual but may contain ‘links’ to people you are or have been associated with e.g. partner or spouse.
A creditor is someone you owe money to. Commonly the money owed originates from credit cards, loans, store cards, catalogues or bank overdrafts.
A debt is the money you owe to someone. Commonly this is the balance of your credit card, the amount outstanding on a loan or store card.
A debt collector can; • Visit your property to collect repayments • Call or write to you to arrange repayments A debt collector cannot; • Enter into your home or seize goods
Debt Consolidation is a debt solution that takes all your outstanding debts and consolidates them into one loan which has a lower interest rate and a higher repayment period. If your debts are spread across a variety of sources such as credit cards, unsecured loans, unpaid bills and other agreements, a debt consolidation loan can help reduce your repayments and make your overall debts more manageable.
A Debt Management Plan or DMP is a debt solution through which we negotiate with the people you owe money to on your behalf. We do this to try and reduce the repayments they are asking for to a lower, more manageable amount. We collect the payment from you and then split this between the debts you have. The payment you make to us will replace any repayments you are currently making. The DMP will continue until the debt has been repaid in full. As part of our negotiation with the people you owe money to, we will ask them to consider freezing interest and charges to allow you to repay the money you owe faster.
A Debt Relief Order or DRO is basically a fast track bankruptcy for people who meet certain criteria. Once a DRO is approved you will not pay anything back and at the end of one year the debt is written off. People qualifying for a DRO have; • Less than £15k debt • Less than £50 surplus • Do not own/have an interest in any property • Own a vehicle worth less than £1,000 • Have assets worth no more than £300 To apply for a DRO the debtor needs to contact an approved intermediary who can give advice and help with the application process.
Debt solutions are financial products that can help debtors to repay debt by lowering repayments and freezing interest. Financial help is available in the form of the following debt solutions Administration Order Bankruptcy Debt Consolidation Debt Management Plan (DMP) Debt Relief Order (DRO) Individual Voluntary Arrangement (IVA) Protected Trust Deed (Scotland only) Re-mortgage Self Help Plan
A debtor is a person or company owing money to another person or company. For example, a company is owed money by its debtors.
A default notice is registered by your creditors once you breach the terms of your arrangement with them, for example by missing repayments. A default notice is lodged as a record on your credit file and will last for six years. It will notify people who look at your credit report that you have defaulted on the terms of an agreement and it can therefore impact your ability to obtain credit.
This means that you ask the creditors to let you pay a lump sum which is less than the full balance you owe on the debt. In return for having a lump sum payment the creditor agrees to write off the rest of the debts. You may be able to do this because you have come in to some money or have some savings you can use. Sometimes a friend or relative offers to put forward a lump sum to help you pay off the creditors. Your circumstances may be very unlikely to change for the better in the future. It is very important that you explain to the creditors that the money will not be available forever and the friend or relative will not make the payments unless the offer is accepted.
Hire purchase (HP) is a term given to a type of secured loan which might have been obtained to purchase a vehicle or other goods. Under the terms of the agreement you are ‘hiring’ them until the agreement completes and all money owed has been paid. At the end of the agreement you complete the ‘purchase’ of the goods and own them outright. If you fail to meet the repayments during the term of the agreement the lender can repossess the goods to reclaim the money they are owed.
An Informal Arrangement is where you (the debtor) approach your creditors yourself to make them fully aware of your financial situation and to determine if they will accept lower repayments until your circumstances change and you can meet the full repayments.
IVA stands for Individual Voluntary Arrangement. It is a fixed term arrangement with the people you owe money to which replaces any repayment arrangements you have in place. With an IVA you only make one monthly payment to us and we then forward that money on to the people you owe. Once you’re in an IVA your creditors are not allowed to contact you; all interest and charges on the money you owe is stopped and what hasn’t been repaid at the end of the IVA is written off. At this point you become debt free; the people you owe cannot chase you for any further payments. Click here for information on our IVA fees
The term legally binding generally relates to a signed agreement. This could be a loan agreement for example where money has been lent by a bank to you. You are legally bound by the terms of that agreement to make the repayments outlined in the contract. If you fail to make the repayments the bank will be able to take legal action to recover the money they are owed. An IVA is another type of legally binding agreement where you and the people you owe money to are bound to adhere to the terms of the contract (the IVA proposal). The contract or proposal will outline the terms which need to be met by you. If you meet these terms then the people you owe money to cannot take any other action against you.
A liability is another name for something that you owe. This can include money to banks, credit cards and loans and also things you have to pay on a monthly basis. Your rent, mortgage and utility bills are also liabilities as it is something you have to pay.
A licensed insolvency practitioner (IP) is a person licensed by one of the Chartered Accountancy bodies, The Law Society, The Insolvency Practitioners Association or the Secretary of State for Trade and Industry. An IP is an expert in debt solutions and has to demonstrate a high level of knowledge and skills through an extremely rigorous examination. The qualification is tough to achieve and there are only around 2000 people in the UK who have achieved it. An IP is the only person who may act as an office holder in an insolvency case.
LTV or loan to value is a term generally associated with a mortgage or secured loan. It relates to the amount of money secured against an asset (generally a property). Most mortgage lenders will use a maximum LTV of around 85%. This means they will only lend up to 85% of the asset value. So if you have a property worth £100,000 and want to re-mortgage you could borrow up to £85,000. Lenders use LTV to limit the risk to them of losing money; for example if property value was to decrease they might not have enough security to cover the money they are owed.
A Protected Trust Deed (PTD) is a debt solution available in Scotland to people who are facing serious debt problems. It is similar to the IVA in England. A PTD is designed to let you become debt free after a fixed period of three years. An Insolvency Practitioner (IP) works with you to assess your circumstances and propose new monthly payments to your creditors. These new payments are based on what you can afford and they will replace all of your current monthly repayments. A Trust Deed offers an alternative to people who would otherwise face bankruptcy.
A re-mortgage is a debt solution that homeowners could consider to consolidate (group together) the money they owe. They can do this by borrowing money against the value of their property (in the same way they did when they got their mortgage) to repay the money they owe. This money then in effect becomes part of their mortgage and is repaid in the same way, through a single mortgage payment every month.
A secured debt is money which has been lent to you with some protection attached to it. This protection could be in the form of a charge against your property or attachment to a vehicle. Under the terms of a secured agreement if you fail to make repayments the lender can repossess the goods which act as protection as payment towards the money you owe.
A debt solution which provides you with the tools to help you manage the debt yourself. You will negotiate with the people you owe money to yourself and by keeping your household budget under control be able to stabilise your financial position.
A statutory demand is the first step to bankruptcy. It’s a very serious document that gives you 21 days to pay the money you owe or to come to an arrangement to repay. If you do neither of these during this time the person you owe money to could petition for your bankruptcy.
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