Every debt, credit and insolvency term you'll come across in the UK — in plain English, without the jargon.
The yearly cost of borrowing including interest and standard fees.
Annual Percentage Rate. A standardised figure that lets you compare the yearly cost of different borrowing products. The APR includes the interest rate plus most standard fees, expressed as a single percentage.
Money you owe that should already have been paid.
Unpaid instalments on a debt or bill. Being 'in arrears' means you have missed one or more required payments. For priority debts (rent, council tax, mortgage), arrears trigger faster escalation than for unsecured debts.
A court order requiring your employer to deduct debt payments from your wages.
A County Court order (in England and Wales) that requires your employer to deduct a set amount from your wages each pay period and send it to the court. The court sets a protected earnings rate to make sure you're left with enough to live on.
The everyday name for an enforcement agent — someone authorised to collect debts in person.
The everyday name for an 'enforcement agent'. Bailiffs must be certificated by a court, must give at least 7 clear days' notice before their first visit for a consumer debt, and cannot force entry into a home on that first visit.
A formal insolvency process that writes off most unsecured debts.
A formal insolvency process in England, Wales and Northern Ireland (a similar process called sequestration exists in Scotland) that writes off most unsecured debts. Bankruptcy has serious consequences for assets, credit and some professions.
A legal 60-day pause on enforcement, interest and charges.
A statutory Debt Respite Scheme in England and Wales. A standard Breathing Space (60 days) pauses enforcement, interest and charges while you seek debt help. A Mental Health Breathing Space lasts for the duration of crisis treatment plus 30 days.
A court's confirmation that you owe a debt.
A County Court Judgment. Issued when a creditor takes court action for an unpaid debt and either wins the case or you don't respond in time. It stays on your credit file for six years unless paid in full within 30 days of judgment.
A court order that secures an unsecured debt against your property.
A court order made after a CCJ that secures a debt against a property you own. It doesn't force a sale, but the debt (with interest) must be paid when the property is sold or refinanced. A separate 'order for sale' is needed to force a sale.
Regulated personal borrowing — credit cards, loans, catalogues, hire purchase.
Personal borrowing regulated by the Financial Conduct Authority under the Consumer Credit Act 1974 and related rules. Covers credit cards, personal loans, overdrafts, catalogues, most hire purchase and other running-account or fixed-sum agreements.
The record of your borrowing history held by credit reference agencies.
A record of your borrowing behaviour held by the three UK credit reference agencies (Experian, Equifax, TransUnion). Lenders check it when you apply for credit. You have a legal right to see and correct your file.
An informal, flexible arrangement to pay debts at a reduced monthly rate.
An informal arrangement to pay unsecured debts at a reduced monthly rate shared between your creditors. Not legally binding, but the most flexible option — you can adjust or exit at any time. Not-for-profit providers offer DMPs at no cost.
A low-cost formal solution for people with limited income, few assets and modest debt.
A formal insolvency solution for people with under £75,000 of debt, limited income and few assets. Fixed £90 fee. Payments to unsecured debts are frozen for a year, and if your circumstances haven't improved the debts are written off.
A formal record that a credit account has broken down.
A formal marker on your credit file recorded when a credit account is significantly in arrears (usually 3–6 months). It stays on the file for six years from the default date, even if the balance is later paid.
What you have left each month after essential living costs.
The amount of money you have left each month after paying essentials — rent or mortgage, utilities, food, priority debts, transport and other basics. Debt solutions typically look at how much of your disposable income can go to creditors.
The legal term for a bailiff.
The formal legal term for a bailiff. Enforcement agents must be certificated by a court, follow national standards, and provide clear identification. They act for creditors including councils, HMRC, court judgments and magistrates' court fines.
A written summary of your monthly income and expenses.
A written summary of your monthly income and expenses used when negotiating with creditors. Many creditors will accept the Standard Financial Statement, which uses agreed expense figures to make discussions easier.
A one-off payment that closes a debt for less than the full balance.
An arrangement in which a creditor accepts a one-off lump sum for less than the full balance and closes the account. Often accepted on older, defaulted or purchased debts. Get any agreement in writing before you pay.
A finance agreement where you pay in instalments and own the item at the end.
A finance agreement — most common for cars — where you pay for the item in instalments and take ownership only when the final instalment is paid. Missed payments can lead to repossession, but statutory protections apply once a third of the total is paid.
A formal, court-recognised agreement to pay a share of debts over a set period.
A legally binding agreement between you and your creditors, arranged through an authorised Insolvency Practitioner. Typically lasts five or six years, at the end of which remaining unsecured debts are written off. Fees apply.
A licensed professional who administers formal insolvency solutions.
A professional licensed to administer IVAs, bankruptcies and other formal insolvency processes. Only IPs can propose IVAs. Fees are regulated but can be substantial and are typically taken from your monthly payments.
A magistrates' court order confirming you owe council tax.
A magistrates' court order (used mainly for council tax) confirming that you owe the debt. Once issued, the council can use enforcement powers including attachment of earnings, enforcement agents, and, in rare cases, committal.
A short statement you can add to your credit file explaining a mark.
A statement of up to 200 words that you can add to your credit file explaining an entry (usually a default or CCJ). Lenders see it when they view your file, though not all systems weight it heavily.
A debt where the consequences of not paying are most serious.
A debt where the consequences of non-payment are most severe — losing your home, essential services, liberty or freedom to work. Priority debts include rent, mortgage, council tax, utilities, HMRC and magistrates' fines.
A formal warning that a creditor may petition for your bankruptcy.
A formal document, served under insolvency rules, warning that a creditor may petition for your bankruptcy if the debt isn't paid or an arrangement isn't reached within 21 days. You have 18 days to apply to set it aside.
An HMRC arrangement to spread a tax bill over months.
An HMRC arrangement to pay a tax bill over a set period rather than in one payment. Self Assessment debts up to £30,000 can be arranged online. Interest continues to accrue during the plan, and missing payments usually cancels it.
A small, symbolic monthly payment made to a creditor.
A small, symbolic monthly payment (often £1) made to a creditor when you have no disposable income. Shows willingness to pay and can prevent further action while you sort out priority debts or wait for circumstances to change.
A Scottish formal debt solution similar to an IVA.
A formal debt solution available only in Scotland, similar in principle to an IVA. Usually lasts four years, at the end of which remaining unsecured debts are written off. Administered by an Insolvency Practitioner.
A debt not secured against an asset such as your home.
A debt that isn't secured against a specific asset. Credit cards, unsecured personal loans, overdrafts, catalogues and most utility arrears are unsecured. Missing payments can lead to court action, but not directly to repossession.
A statutory right to end an HP or PCP agreement early.
A right, under the Consumer Credit Act, to end a Hire Purchase or PCP agreement early once you've paid at least 50% of the total amount payable. You return the vehicle and are not liable for further payments, though condition damage may be chargeable.
When a creditor formally cancels a debt.
When a creditor accepts that a debt won't be recovered and formally cancels it. Can happen after formal insolvency (bankruptcy, DRO), successful complaint, statute-barred defence, or a creditor's discretionary decision.
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