This glossary of terms explains the meaning behind common phrases that relate to personal finance, insolvency and debt management.


In most IVA’s you are required to pay 50% of any additional income earned over 10% of the amount stated in your IVA proposal. For example if your IVA proposal states your income as £1,000 per month, you are required to pay half of anything you earn over £1,100.

An administration order permits you to pay off debt in instalments. This court order is placed if you have at least one County Court Judgement (CCJ) and your total debts do not exceed £5,000. One payment is made to the court and this is split between all creditors in accordance with how much you owe. No insolvency practitioner is involved. As long as an administration order is in force, creditors cannot take further enforcement action and interest is stopped.

An administrative receiver is a type of insolvency practitioner. Once appointed, the administrative receiver has control of your company’s property and powers over your business.

When your company borrows money, the lender is usually given some security over your company’s assets to guarantee payment. This type of lender is called a secured creditor. If you fail to keep to the terms of the loan, the lender may be entitled to appoint an administrative receiver.

This is the insolvency practitioner appointed by the court to handle the affairs of a company which is the subject of an administration order. They are responsible for managing the company through an administration process. The administrator is introduced by a company’s directors and/or shareholders and confirmed by its creditors at a creditor meeting. The administrator must be a licensed insolvency practitioner.

Our business partners with whom we acquire packaged cases.

This is the agreed arrangement between the client and the debt management provider made principally on the debt management company’s terms of business.

An Ambassador is usually a person employed by an organisation or company to promote its products or services. They are meant to embody the corporate identity in appearance, demeanour, values and ethics of a company or brand.

Annual Percentage Rate (or APR) is the interest rate charged to a personal loan, credit card or mortgage for a whole year as opposed to the monthly rate. The APR will generally include compound interest, which is earned on interest which has been added to the loan in previous months.

This review includes a full re-assessment of your current financial circumstances on the anniversary of your DMP/IVA.

An antecedent transaction is when an action has taken place prior to insolvency which may have resulted in one creditor being treated more favourably than another or an asset has been disposed of to the detriment of creditors. In these circumstances, the official receiver as trustee or liquidator in the bankruptcy proceedings can apply to court to reverse the transaction.

A legal term which means you cannot pay your debts when they become due. Sections 267 and 268 of the Insolvency Act 1986 set out circumstances in which an individual is deemed unable to pay his debts in the context of a bankruptcy petition issued by one of the individual’s creditors

A legal term for the part of a debt that is overdue after missing one or more required payments.

Assets are items you own that have monetary value. Assets include property, vehicles, stocks, shares, jewellery, savings etc.

A legal transfer of a debt account from a creditor (assignor) to a third party (assignee) that then becomes the rightful owner of the account for purposes of resolving the debt through collection.

A notice to the debtor informing that a debt has been assigned (sold) to another company.

Associates of individuals include family members, relatives, partners and their relatives, employees, employers, trustees in certain trust relationships, and companies which the individual controls. Associates of companies include other companies under common control.

An Attachment of Earnings Order can be sought from the court by a creditor if you fail to make payments as ordered in a CCJ. The creditor can apply for the owed money to be deducted from your wages or benefits.

A reduction or decrease in numbers, size, or strength.

A Bailiff is someone who has a legal power to collect certain debts. They may also be called enforcement agents. Bailiffs may recover monies owed by taking or selling your goods.

A repayment of the outstanding principle sum made at the end of a loan, hire purchase or lease agreement.

A bankrupt someone declared in law as unable to pay their debts.

Bankruptcy is a legal status of a person who cannot repay their creditors. Bankruptcy proceedings may be voluntary (instituted by the debtor) or involuntary (instituted by creditors).

A formal document, issued by the debtor online to an adjudicator, or by a creditor, submitted to the court.

A Bankruptcy Restriction Order (BRO) is a court order which extends the restrictions placed on a bankrupt. A BRO may be in place for a period of 2-15 years.

Once an individual is declared bankrupt, if the official receiver considers that their conduct prior to the bankruptcy was dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a BRO to be made. The court will consider this report and any other evidence put before it, and will decide whether it should make the order.

A voluntary agreement made between the debtor and the trustee. This has exactly the same effect as a BRO but does not involve going to court.

Because the bankrupt is admitting the unfit conduct, the period of the BRU is likely to be shorter than if the court made a Bankruptcy Restrictions Order. By entering into a BRU, the bankrupt will avoid having to attend a court hearing.

If you are not married or are not named on the deeds on your property, you may still have some rights to it if you have made contributions towards the property, financially or otherwise. This is known as establishing a beneficial interest.

A beneficial loan is a loan made by an employer to an employee.  The interest on the loan is either not charged or is less than the official rate. The difference between the interest charged and the official rate is taxable.

A beneficiary is a person who is entitled to receive funds or property under the terms and provisions of a will or trust, insurance policy or security instrument.

Benefits are monies paid to a person by the state and include income support, child benefit, job seekers allowance, disability benefit, housing benefit and council tax benefit.

A bond is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity. Interest is usually payable at fixed intervals (semi-annual, annual, sometimes monthly).

This is an insurance that your Insolvency Practitioner must obtain to safeguard contributions made into the IVA.

Your IVA is a legally binding agreement. If you break the terms of the IVA then you will be issued with a notice of breach which will set out the reasons for the breach. You must then contact your supervisor so we can discuss how to remedy the breach.

A bridging loan is effectively a short term loan secured on property by way of either a first or second mortgage. Bridging loans normally run for a period between 3 and 6 months, however a longer term may be justified under certain circumstances.

A budget is an estimate of income and expenditure for a set period of time.

The financial expectations for the business usually set at the beginning of a financial period/year.

A building society is a ‘mutual’ non-profit institution. Building societies are mutual, which means that they are owned by their members who are entitled to share in their profits and benefits.

BAU is the work that is required to be carried out as part of standard daily practice.

Business debts are the debts owed by the business, e.g. utilities, rent, suppliers, tax and VAT.

This is the date on which a case will first appear in court.

A calling up notice is a legal document that ends a mortgage agreement, asking for the whole amount of the outstanding debt to be paid.

The cash generated or spent by the business.   The difference between profit and cash is that revenue can be generated prior to cash being collected or expenses incurred before or after you physically pay for them.  An example of the later is paying for a computer.  You may pay the cash for it on day 1 but as it has a useful life of 3 years to the business.  Therefore there is a cash outflow on day for the purchase but this becomes an asset of the business.  The asset is depreciated over 3 years so 1/36 of what was paid out in cash is a cost to the business each month, for 36 months.

A certificate issued by the court to prove a CCJ or Attachment of Earnings has been paid. A fee of £10 is required.

A cash flow forecast is a schedule setting out estimates of future receipts and payments, analysed into various categories and showing the impact at specified intervals on the bank balance.

This is a court order placing restrictions on the disposal of assets, such as property or securities, and gives priority of payment over other creditors. It turns an unsecured debt into a secured debt.

A document served in Scotland, where the debtor has been ordered to pay an outstanding debt within a given timescale.

An office represented in most towns in the UK where the public can obtain free advice on an extensive range of civil matters such as social security, employment, housing matters such as mortgage and rent arrears, legal matters such as legal aid, family matters, taxation, debt and many other subjects.

This means any payments by the client received into the debt management company’s Fee or Client Account that can be drawn upon, irrespective of the method of payment. For example: direct debits, standing orders, cash payments by payment card, debit card, bank giro credits or electronic transfers.

The account where any monies held on the client’s behalf, in respect of their monthly Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) payments, are kept and which cannot be used for any other purpose in the company’s business.

These forms are required to be signed by the client to give the debt management company the authority to contact the client’s creditors and to act on the client’s behalf. In many instances the creditors do not need to see these forms, as debt management companies routinely deal with them under a formal Data Protection Agreement, however, they require to be on record in the event of a request for inspection by any creditor with whom the debt management company is dealing on a client’s behalf.

This is a detailed statement of the client’s current financial affairs, listing sources of income and items of expenditure, including priority creditors and other unsecured creditors. This is used as the basis of calculating what the client can reasonably afford to pay to their creditors and in calculating the debt management company’s fee.

A comparative outcome statement compares what your creditors may receive if you enter an IVA or bankruptcy.

1st and 2nd charge commercial mortgages and loans are available from a wide selection of lenders for a wide selection of clients, including clients with no accounts, CCJs and arrears, or self certification available.

A disqualification order is made by the court under the Company Directors Disqualification Act 1986. The Act applies not only to a person who has been formally appointed as a director but also to those people who have carried out the functions of a director and to shadow directors.

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A CVA is the equivalent to an Individual Voluntary Arrangement (IVA), but for businesses. It allows any financial problems to be overcome with the creditors’ consent so that the business can continue to trade.

A composition is an agreement between a debtor and his creditors whereby the compounding creditors agree to a payment of less than the owed amount in full satisfaction of a claim.

This is when a company is placed into liquidation as a result of an application to the court, usually by a creditor.

Directors or shadow directors and their associates, and associates of the company.

Consolidation (when referring to a consolidation loan) is the combining and repayment of several debts by borrowing the amount owed through one new debt. It is often possible to reduce interest charges or monthly outgoings by doing this.

The Consumer Credit Act regulates credit in England and Wales. CCA establishes the grounds to be followed by any business giving credit to a consumer. It requires that businesses offering goods or services on credit, or those that lend money to consumers have a license by the Office of Fair Trade. The amendment to the act provided consumers with even more rights under this law.

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This is when the judge may decide to continue hearing your case on a different date.

These are the payments you agree to pay each month when you sign a credit agreement. Failing to make the contractual payments can lead to arrears and this can affect you credit rating.

A County Court Judgment (CCJ) is an order by the court requiring a debtor to pay what they owe to a specific creditor. A Creditor can apply to the court to have a Count Court Judgment put in place if they are unable to collect a debt owed to them because the debtor is unwilling or unable to pay.

A person, not necessarily a licensed insolvency practitioner, appointed to take charge of assets – usually where they are subject to some legal dispute.

A formal document sent to inform you that a creditor has begun legal proceedings against you. You are given 14 days to respond to the form. Ignoring the claim will result in a Judgment being registered by default, and an order to pay the whole amount immediately.

The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

A credit agreement is a legal contract in which a lender arranges to loan a customer money for a specified period of time and/or with specific repayment terms.

A file held by authorised companies with financial history regarding credit applications and credit you have obtained.

The Credit Reference Agency is one of several companies who maintain records of debtors’ history of payments, etc.

A creditor is a person or company that lends you money (usually a bank, building society or credit card company).

A creditors’ committee is formed to represent the interests of all creditors in supervising the activities of an administrator or trustee in bankruptcy, or receiving reports from an administrative receiver.

A CVL is the process where the directors of an insolvent company can voluntarily take steps to wind up the company. The directors call meetings of the company’s shareholders and creditors to consider resolutions to wind up the company and to appoint a liquidator. This is used when a company is insolvent and no longer has a viable business worth saving.

Credit unions are financial communities set up by and for members with common ground, such as their profession or location. Members pool their savings to offer financial products such as loans, with some even providing current accounts and mortgages.

The person nominated by a company in accordance with the provisions of the Data Protection Act 1998 to be responsible for the keeping of personal data.

This is a certificate of debt; a document stating the terms of a loan, usually to a company. Debentures may be secured on part or all of a company’s assets, or they may be unsecured.

A sum of money that is owed or due.

A Debt Arrangement Scheme (DAS) is a statutory debt management scheme available to residents of Scotland. Further information is available at

A company that specialises in collecting debts owed by individuals or businesses. They can either operate on behalf of a creditor or can have the debt assigned to them, in which case, they become the creditor.

Debt Management is an informal process of negotiation with unsecured creditors to obtain a reduction in the contractual repayment and/or a reduction in the interest/ charges being levied by the creditor. The negotiation process involves providing proof to the creditor that the individual has insufficient income to meet all their contractual liabilities.

The contract terms that govern the Debt Management Services provided to the client by the debt management company.  This must comply with the Office of Fair Trading – Debt Management Guidance – issued in 2001. This agreement must be fair and in plain, legible English.

A company properly licensed under the Consumer Credit Act 1974 that acts as a client’s Debt Manager. A DMC can provide advice on how to restructure debts, alter debt repayments and/or achieve early resettlement of debts. This will normally involve negotiating with creditors and providing the client with a facility to make a single monthly which is distributed to their creditors. This requires regular reviews of the client’s financial circumstances and/or on-going monthly payments.

The DMP, or Single Payment Plan, represents the informal arrangement between the client and their creditors whereby the debt management company administers the reduced monthly payments to the client’s creditors on their behalf. The client makes one monthly payment and the debt management company deducts its monthly management fee and then distributes the agreed amounts to the client’s creditors on a proportional basis, based upon the amount of debt owed to each creditor.

Debt Relief Orders were introduced to resolve debt problems for people who have little or no disposable income or assets. A Debt Relief Order works in a similar way to that of Bankruptcy. Once the Order is granted, the individual in debt will no longer be responsible for paying their debts and their creditors can no longer pursue them for repayment. They will not be required to make any payments towards their debt unless they can afford to do so.

A debtor is an individual or company who owes money to another individual or company.

A decree is an official order made by a judge to decide in favour of the mortgage lender and debtor.

This is an official order that ends your living rights at a property.

Failure to fulfil an obligation to repay a debt.

A notice of default is provided to a borrower to state that they have not made their payments as determined in the credit agreement.

A defendant is the person against whom legal action is taken, i.e. the borrower in the case of repossession.

If your income is less than your expenditure, i.e. you are spending more than you are bringing in, this is a deficit. Reducing your outgoings or increasing your income can assist in a financial deficit.

People who rely on others for their living requirements and have no income of their own, for example children and homemakers.

The reduction in the value of an asset over time.

To disadvantage, prejudice or wrong. In an IVA it is important that the Insolvency Practitioner ensures any actions made by customers are not to the detriment of their creditors.

The directors disqualification report (or D1 report) is the report written by liquidators (generally insolvency practitioners), which is required by law in accounting the conduct of the directors of all businesses when they fail. The report may find that the directors in question have acted properly in which case no further action is necessary.

A payment made to a third party. This may include fees paid for insurance, couriers, credit searches and PPI investigations.

Discharged bankrupt is the term given to an individual who has been released from their bankruptcy.

When referring to court a case may be dismissed if the judge does believe there are sufficient grounds for the action or a settlement has been reached.

Disposable income is the amount of money remaining once all essential household expenditures (not including payments to unsecured debts) have been deducted from income.

A director found to have conducted the affairs of an insolvent company in an “unfit” manner may be disqualified.

This is the right for anyone whom rent is payable to (e.g. a landlord), to sell debtors’ goods to contribute to the rent arrears.

Payments made to creditors are sometimes referred to as distributions. Distributions are normally made to creditors on a monthly basis in a debt management plan. This is not always the case in an IVA as Nominee fee and disbursements are normally charged before distributions are made. This is agreed by your creditors.

Any sum distributed to unsecured creditors in an insolvency proceeding, usually depicted as p/£.

The Scottish equivalent to an Attachment of Earnings Order; the court can order for monies to be deducted from the debtor’s wages to repay an outstanding debt.

Earnings before interest, tax, depreciation and amortisation

This order forces the borrower out of the property and allows the lender to repossess.

An estimated outcome statement shows you and your creditors what contributions you are predicted to make over the term of the arrangement, what fees and costs are predicted to be drawn and what amount creditors will receive at the end of the term.

Equity is the difference between the value of the mortgage against a property and its current market value. If the sum of all loans secured on a property is greater than the market value, this is known as negative equity.

This is a term used when legal proceedings are brought by one person in the absence of and without representation or notification of other parties.

Expenses refer to costs. The term expenses may be used for accounting purposes when trading, in relation to court costs or any individual costs payable by an individual.

An extortionate credit transaction is a transaction by which credit is provided on terms that are exorbitant or grossly unfair compared with the risk accepted by the creditor.

This is a copy of the decree that the court has. It records the name of the case as well as the order made by a court and can be used to effect further arrests or to serve a ‘charge’ for payment.

A final discharge will be posted to a bankrupt to show they are released from their bankruptcy. All unsecured debts included within the bankruptcy will be settled.

Finance leasing is commonly used to finance motor vehicles or office equipment such as computers. The supplier will provide the vehicle or equipment to the customer but the ownership remains with the supplier. The customer will agree to pay a monthly payment or rental to the supplier for a fixed period of time – often two to three years. At the end of this period, the customer has the option to hand back the vehicle or equipment to the supplier with nothing more to pay. Alternatively, the customer may have the option to pay a lump sum to the supplier (known as a balloon payment) and buy the vehicle or equipment outright.

A financial review is conducted every 12 months during an IVA. If your circumstances have improved or otherwise we will contact you to discuss any changes in your monthly contribution.

This is the first hearing of a case in court.

Tangible items buy that you can physically ‘touch’ which have a useful life to the business of greater than 12 months (e.g. a computer).

A fixed charge is a form of security granted over specific assets, preventing the debtor dealing with those assets without the consent of the secured creditor. It gives the secured creditor a first claim on the proceeds of sale, and the creditor can usually appoint a receiver to realise the assets in the event of default.

A floating charge is a form of security granted to a creditor over general assets of a company which may change from time to time in the normal course of business (e.g. stock). The company can continue to use the assets in its business until an event of default occurs and the charge crystallises. If this happens, the secured creditor can realise the assets to recover his debt, usually by appointing an administrative receiver, and obtain the net proceeds of sale subject to the prior claims of the preferential creditors (e.g. Customs & Excise or Inland Revenue).

The expected result for a financial period based on current trend and expectation.

Deception intended to result in financial or personal gain.

In company law, fraudulent trading is doing business with intend to defraud creditors.

The freeholder of a property owns it outright, including the land it’s built on.

It is possible to offer creditors an amount in full and final settlement of your debts so that the debt management plan or IVA can conclude earlier than anticipated.

In some circumstances it may be possible to ask creditors to accept monies paid to date and complete the arrangement early/write off any remaining debts. For example if you or someone in your household is unable to work due to health reasons.

A business estimate of the current year’s financial performance.

An individual’s total personal income, before deducting tax, national insurance and expenses.

A legal commitment to repay a debt if the original borrower fails to do so. Directors may give guarantees to banks in return for the bank giving finance to their companies. Companies in a group may guarantee each others’ loans. A guarantee is normally a legally binding commitment from a 3rd party that they will be liable to repay outstanding debt if the original debtor who borrowed the money is unable to pay it back.

When a person has assured the creditor that the debtor will make the repayments. If the debtor fails to make the payments the guarantor will be liable for them.

The revenue generated by the business less the cost incurred by the business in generating that business (e.g. marketing, sales team etc)

The combined offices of the Inland Revenue and Customs responsible to the Treasury for the collection of direct taxes which include income tax, national insurance, inheritance tax, corporation tax and value added tax.

The pre-agreed purchase of an asset where the asset remains in your possession as long as repayments are maintained.  Once full payment is made, the asset becomes the property of the consumer.

A state benefit payable if a person is still unfit for work. This benefit replaces the former invalidity benefit.

A breakdown of the household income, including benefits, taking into account living expenses e.g. rent, mortgage, utilities and ongoing costs. You may be asked to complete an income and expenditure on several occasions so that we can ensure you receive the appropriate advice and information for your circumstances.

An income payment agreement (IPA) is a legally binding agreement requiring an individual to make payments towards their creditors out of their income after they have been declared bankrupt. The agreement will generally last for three years (36 months).

In Bankruptcy, the Official Receiver or Trustee can apply for an Income Payments Order if they feel that the debtor can afford to make a regular contribution into the bankruptcy, which would then be distributed for the benefit of the creditors.

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between a debtor and their creditors to settle debt over a fixed period of time (normally five years). The debtor will normally make regular affordable monthly payments and may also introduce a lump sum payment. At the end of the 5 year period, whatever debt is still outstanding is written off by the creditors.

Inflation is an increase in the supply of currency or credit relative to the availability of goods and services, resulting in higher prices and a decrease in the worth of money.

This is the term for arranging reduced payments to your creditors without the assistance of a third party.

An initial fee is payable to a debt management company by a client for setting up a debt management plan and negotiating with creditors to accept reduced monthly.

In an IVA if your creditors fail to submit a vote at a meeting of creditors, the meeting will be deemed inquorate and it won’t be accepted.

Having insufficient funds to meet all debts, or being unable to pay debts as and when they fall due.

Primary legislation governing insolvency law and practice.

An Insolvency Practitioner (IP) is someone who is licensed and authorised to act in relation to an insolvency individual, partnership or company.

Insolvent is the word used to describe an individual or company who is unable to repay their debt. There are two different definitions of insolvency. The first is where an individual or company’s debts or liabilities are greater than their assets. The second is the position where an individual or company is unable to afford to maintain their debt repayments as and when they fall due.

A company goes into insolvent liquidation if it goes into liquidation at a time when assets are insufficient for the payment of its debts and other liabilities and the expenses of liquidation.

As above but items which you can’t physically touch (e.g. client cases)

A percentage charge added to a loan.

An interim order is an order of the court which suspends all legal action against an individual or company by their creditors. An interim order will normally be issued for 28 days. An insolvency practitioner has the option of applying to the court for an interim order to allow time for a debt management solution such as an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA) to be presented to creditors.

An interim trustee is someone that is entrusted to handle an estate in bankruptcy until a permanent trustee is appointed.

A statutory scheme operated by the SIB (Securities and Investments Board) to give individual investors up to £48,000 protection if an authorised investment business collapses.

The IVA protocol is a standard set of rules governing how most consumer IVAs are constructed including the length of time they will last, how equity in a property will be dealt with and the amount of nominee and supervisor fees that will be charged.

This is when a credit agreement is taken out in joint names, such as a loan or overdraft, and both are liable for the full amount of any debt.

A judgment is the decision given by a court at the conclusion of a trial.

This act governs transactions in law and property. Contains statutory powers of receivers appointed under a fixed charge. For more information:

Leasehold property is the description given to a property which does not own the land on which it is built. Normally flats are described as leasehold properties as the ownership of the land on which they are built is owned by a third party. The owners of each individual flat will normally pay a ground rent to the owner of the freehold. It is possible that the owners of each flat may collectively own the land or freehold on which they are built.

A person or company who lends money.

This is when a bailiff retrieves payment or goods to raise the sum on the warrant and costs. Notice of this comes 7 days before the bailiffs arrive.

A liability is a term that often refers to debts.

This order follows a failure to pay council tax 28 days after due date. A court summons is issued and not paid within the time a liability order is issued. It allows authorities to make arrangement for the arrears to be paid by deducting it at source, from wages or benefits.

Lien is the right to retain possession of assets or documents until settlement of a debt.

A limited company is a separate legal entity that is set up to trade as a business. The business is owned by shareholders and is managed by directors who are employees of the company.

A definite amount of damages, set forth in a contract to be paid for by the party breaching the contract. A pre-determined estimate of actual damages from a breach.

Liquidation is the act of closing down a Limited Company. The company’s trading is stopped and its assets are sold and turned into cash. This cash is then first used to pay off any outstanding debts that the Company owes. Any remaining funds are returned to the company shareholders.

Liquidation is the act of closing down a Limited Company. The company’s trading is stopped and its assets are sold and turned into cash. This cash is then first used to pay off any outstanding debts that the Company owes. Any remaining funds are returned to the company shareholders.

The person appointed to deal with the assets and liabilities of the company or partnership once the resolution to liquidate (wind up) has been passed or a compulsory winding up order has been made.

An LPA Receiver is a person (not necessarily an insolvency practitioner) appointed to take charge of a mortgaged property by a lender whose loan is in default, usually with a view to sale or to collect rental income for the lender.

Court order preventing the disposal of assets.

Once an IVA proposal has been drafted the Insolvency Practitioner will set a date for the Creditor’s Meeting to take place. The purpose of the meeting is to give creditors an opportunity to vote on whether they accept or reject the IVA proposal. In most case the meeting itself is a virtual meeting and no one is required to attend in person. For an IVA to be considered accepted you need more than 75% of your creditors, in debt value terms, agree to your IVA Proposal. However, any less than this percentage and your IVA will be considered rejected

Shareholder of a company.

A solvent liquidation where the shareholders appoint the liquidator to realise assets and settle all the company’s debts in full within 12 months.

Breach of duty in relation to the funds or property of a company by its directors or managers.

A modification is a change to the original terms of the IVA proposal.

Money Advice Scotland is a charity that promotes the development of free, independent, impartial, and confidential debt advice and financial inclusion, in Scotland. Today MAS serves a membership of around 150 members covering organisations and individuals drawn from local authorities, CAB’s, and other voluntary projects, who all provide money advice. Other members who are supportive of their objectives include Insolvency Practitioners, creditor and debt collection organisations.

A monthly fee for managing the client’s affairs with their listed creditors, providing on-going debt advice, administering payments, issuing statements & correspondence reports, processing correspondence receive from creditors, dealing with new creditors or agencies when notified and generally acting in the client’s best interests over the duration of the Debt Management Agreement.

A legal agreement where a bank or building society lends money at interest in exchange for taking title of a customer’s property.

The income that an individual takes home after all taxes, national insurance and other deductions

A Nominee is an Insolvency Practitioner has been chosen by an individual or company to propose an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA) on their behalf. The Nominee will work on behalf of the Individual or Company until the IVA or CVA is accepted by the creditors.

A notice of full implementation is issued upon successful completion of the IVA. A copy is sent to all creditors.

A person who is required to be a qualified insolvency practitioner to hold the following posts, of a liquidator, provisional liquidator, administrator, administrative receiver, supervisor of a voluntary arrangement, or trustee in bankruptcy.

The official receiver (or trustee in bankruptcy) deals with the administration for a bankrupt. They will normally carry out an interview of the bankrupt and it is ultimately their decision as to whether assets should be sold for the creditors’ benefit.

The term onerous property in the context of a liquidation or bankruptcy, applies to unprofitable contracts and to property that is unsellable or not easily saleable or that might give rise to a continuing liability. Such property can be disclaimed by a liquidator or a trustee in bankruptcy.

Operating expenditure which is the cost of doing business

The support costs of the business. E.g. support team, rent, rates, heating etc.

Where creditors vote to reject an IVA proposal it may be possible to overturn the rejection by negotiating with the creditors or providing further information regarding a customer’s circumstances.

Partnerships are businesses that are owned by two or more people and the relationship between the partners can be informal or formal. Within an informal partnership there is no written agreement between its members as to how the partnership is to be run, how profits are to be distributed and so can often cause feuds between partners.

A PAO is designed to protect partnerships from creditor action while a restructuring or sale plan is developed.

This is a procedure to wind up (liquidate) a partnership as an unregistered company. The procedure is likely to be used by creditors to enforce payment of a debt or when the partners have decided that the partnership is insolvent, has no future and cannot continue to trade.

The procedure allows a partnership that cannot meet its debts to enter into a formal agreement with the partnership creditors to repay the debt either in full or partially over a fixed period.

The amount received as a percentage of the amount owed. For example 10p/£ means that creditors will receive 10p for every £1 that a customer owes (10%).

A written application to the court for relief or remedy.

An act which established Policyholders Protection Board to provide compensation to the public in the event of the liquidation of an insurance company. The Board will make payment in full of liabilities under certain policies of compulsory insurance and 90 per cent of liability to provide policyholders under other general and investment type policies. Compensation is restricted to individual policyholders or partnerships. Corporate policyholders are not protected.

A payment or other transaction in the six month to two year period preceding a liquidation, administration or bankruptcy, which places a creditor or a person connected with the insolvent, respectively, in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover any sums which are found to be preferences.

Defined in Schedule 6 of The Insolvency Act 1986. Has priority when funds are distributed by a liquidator, administrative receiver or trustee in bankruptcy.

A preferred creditor is a creditor who will be paid first before other creditors in the case of an individual becoming insolvent or a business being put into liquidation.

These are regular payments and payment arrears for mortgage, rent, council tax and utility bills. Individuals should not ignore any payment arrangements enforced through a court.

The revenue generated by a business less the costs it has incurred doing business

This means “in proportion to”.

A form the creditor can submit to state their claim in an IVA or bankruptcy.

Your Insolvency Practitioner will register a restriction over your property once the IVA is approved. The purpose of the restriction is to protect the equity and inform interested parties that the property is subject to an IVA. This also prevents the sale of the property without the prior knowledge and agreement of the insolvency practitioner.

A creditor who claims is referred to as “proving” for their debt, and the document by which they seek to establish their claim is their “proof”.

The person appointed by the court to deal with the affairs of the company until a compulsory winding up order.

The authority given by a creditor or member to another person (proxy holder) to attend a meeting and speak and vote at a meeting on behalf of the creditor (principal) or member

A person who is authorized to attend a meeting on behalf of someone else.

This is the party or person who started legal action.

The total unsecured debt and the number of creditors listed in a client financial planner.

Money you pay into the IVA.

The person appointed by the court for some specific purpose or the person appointed by a mortgage to exercise his rights over the charges property under the Law of Property Act 1925 (not to be confused with the Official Receiver or Administrative Receiver.)

The general term applied when a person is a appointed as a receiver or administrative receiver over certain assets.

This is a court order that appoints a receiver to take charge of a business involved in a legal proceeding such as bankruptcy.

An organisation approved by the Secretary of State as being able to authorise its members to act as insolvency practitioners.

Where the amount due to be paid to creditors in an IVA reduces either because the amount owed to creditors increases or the contributions reduce.

Money paid for work or service.

Repossession is the term generally used where a creditor claims property over which they have a charge due to the non payment of a debt.

An agreement for the sale of goods to a company, being an agreement; (a) which does not constitute a charge on the goods, but (b) under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company in respect to the goods or any property representing the goods.

A Restriction Order is an order by the court which stops the sale of an asset such as a property without the permission of the person who applied for the order.

When you have fallen into arrears with payments to a credit card or loan and you also hold a current account with the same company, they can use the “Right to Off-Set” to take funds from your current account, without your permission, to bring the debt back up-to-date.

R3 – the Association of Business Recovery Professionals is the name of the trade body for insolvency practitioners (IPs). R3 stands for rescue, recovery and renewal. R3 is not a governing body and Insolvency Practitioners do not have to be a member of the organisation. However it has a powerful voice within the insolvency industry.

A fee charged by the government for the administration of a bankruptcy

This court order could stop a lender from repossessing a property, or gives the defender more time to find alternative accommodation. It applies to homeowners, spouses, cohabite or former cohabite.

Section 24 of the Conveyance and Feudal Reform (Scotland) Act 1970 states lenders should apply to the sheriff court to repossess and sell a property when the owner defaults on payments.

A secured creditor is a creditor who has a claim over an asset of the individual or company who owes them money. If for any reason the debt owed is not repaid, then the secured creditor can claim back or repossess the assets on which the debt was secured.

Secured debt is money which has been lent to an individual or company on the basis that if it is not repaid, the lender (or creditor) will be able to claim the asset on which the debt was secured.

A charge or mortgage over assets taken to secure payment of a debt. If the debt is not paid, the lender has a right to sell the charged assets.

Sequestration is the Scottish term for bankruptcy. Further information is available at

A person who is not formally appointed as a director, but in accordance with whose directions or instructions the directors of a company are accustomed to act.

A sole trader is a self-employed individual who is carrying on a business which is not a limited company. The business may take the name of the individual themselves or may operate under a trading name. The business is solely owned and controlled by one person and so does not have a separate legal existence from its owner. The owner has unlimited liability in respect of the business’s debts and is responsible for their payment in the same way that they are responsible for their household debts.

A special manager is a person appointed by the Court in a compulsory liquidation or bankruptcy to assist the liquidator, official receiver or trustee in managing the insolvent’s business. He does not need to be an insolvency practitioner.

A Statement of Affairs is a summary of an individual or company’s financial situation at any given moment in time. The statement normally comprises details of income, expenses, assets and debts.

This is a formal statement of the claim being made against the defendant as well as the grounds in support of it.

SIPS are a series of guidance notes issued to licensed insolvency practitioners. The purpose of SIPs is to outline basic principles and essential procedures with which insolvency practitioners are required to comply. Departure from the standards established in SIPs is a matter that may be taken into account in the event of disciplinary or regulatory action.

Sip 9 deals with fees charged by insolvency practitioners. It details how they can be charged and what information we must provide to creditors.

A debt is considered Statute Barred if a creditor has not contacted a debtor for a period of 6 years and no action has been taken on the account. Although the debt is still legally acknowledged as being owed, the creditor is not able to take any legal action against the debtor in order to recover the debt. It is considered unfair if a creditor or debt collector misleads the debtor into believing the debt is still legally recoverable. It is also considered an unfair practice if the creditor or debt collector press for payment after the debtor has stated they will not be paying the money owed. This could amount to harassment contrary to Section 40(1) of the Administration of Justice Act 1970.

A statutory demand is a legal document requiring the debtor to pay an outstanding debt (of over £5,000) in instalments or as a lump sum, or to secure it against a property. The debtor has 21 days to pay. After that a bankruptcy petition may be issued.

If your case is stayed, it is stopped to see how things work out. If your case is sisted for a year, your lender can recall the stay at any time during that year and bring the case back to court if you fail to keep to an arrangement you have made with them. Cases are stayed for a certain period to find alternatives to repossession. The lender may recall the stay at any time, however.

The Stubbs Gazette is a weekly publication advertising all cases of personal and company insolvency in England and Wales.

A student loan is the name given to a Government backed initiative to give registered students access to cash loans to support them financially while studying. Student Loans are lent through the Student Loans Company (SLC) and repaid through the tax system only after the student has left higher education and is earning over £16,900 before 2012, and £21,000 after 2012.

A request made to a data controller for information held on an individual (the subject) under section 7 of the Data Protection Act 1998.

The Supervisor is the term given to the Insolvency Practitioner who is appointed to manage an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA) following its approval. The Supervisor works to make sure that the best interests of the creditors are met by ensuring that the individual or company pays as much of their debt back as reasonably possible during the course of the arrangement.

This is the amount you are left with if you subtract all your living expenses (housing costs, food, travel, clothing insurances etc.) from your incomes (wages, pensions, benefits etc). This is the amount of “surplus income” available for the creditors.

Same as forecast – The expected result for a financial period based on current trend and expectation

The total of arrangement fees and interest added to the loan amount.

A time order permits the court to make changes to the consumer credit agreement.

When you are unable to make repayments to your creditors, it may be necessary to make small “token payments” to each creditor. This may be as little as £1.00 each per month, but it is better to send this “token payment” than send nothing at all.

A transaction at undervalue is simply the sale of goods or services for less than their true market value. In the context of insolvency, if goods have been purposely sold at undervalue to avoid them being seized by the trustee in bankruptcy and realised for the benefit of creditors, the trustee may have the authority to claim these goods back from their new owner.

A Trust Deed (or a Protected Trust Deed) is the Scottish equivalent of an IVA. It is a formal arrangement that is used in Scotland where a consumer grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors. It will normally stop legal action and protect you and your home. Provided certain conditions are met, the Trust Deed may be registered as “protected”, thereby preventing creditors from petitioning for the debtor’s sequestration.

Either the official receiver or the insolvency practitioner who will take control of the selling of assets during an IVA or bankruptcy.

TUPE stands for Transfer of Undertakings and Permanent Employment. This is European employment law which requires that if a company is sold, its employees must be transferred with the business while maintaining their terms and conditions of employment and length of service benefits.

Someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy.

An unsecured creditor is a creditor who has no claim over any of the assets of the individual or company who owes them money. If the money is not repaid, the unsecured creditor must pursue the debt in the Court.

Refers to a loan, credit card, store card or catalogue where monies are not secured on any asset or property.

If a winding up petition has been issued against a company, it is then legally prevented from selling any assets or property and its bank accounts will be frozen. The only way that the company can unfreeze its bank accounts or allow assets to be sold is if such transactions are agreed by the court. If in agreement the court will grant what is known as a validation order.

The validation order normally covers specifically named transactions such as the sale of a specific asset or specific payments from the company bank account for example for staff wages.

When a CCJ has been ordered but due to unforeseen circumstance the debtor can’t pay it, an application to vary the payments can be done by using the form N245.

The relief obtained in respect of the VAT element of an unpaid debt. Previously available only when the debtor became insolvent, relief is now available on any debt unpaid for more than 6 months.

The placing of a company into liquidation by resolution of the members. There are two types of voluntary liquidation: member’s voluntary liquidation and creditor’s voluntary liquidation. Member’s voluntary liquidation does not involve insolvency and comes about merely because the shareholders wish to have the value of their shareholding realised

The amount paid to creditors (normally on a monthly basis) in an IVA.

A voluntary surrender form is the document you can sign and give to your mortgage lender if you decide to voluntarily leave your house and allow the lender to repossess it.

Creditors are required to vote to accept or reject an IVA proposal. Votes may be received by email, post, fax or in person.

A walking possession order lists the goods which a bailiff will take from your property if you do not pay your debt, or ignore requests for payment, within the time agreed in your contract.

If a warrant of arrest is issued, then the police are sent to arrest the person and can either hold them in custody until they can be brought before a judge or they can be granted bail and given a date when they must attend the court.

When a debtor has failed to pay a CCJ and no variation orders have been made, the warrant of execution allows bailiffs to go into a property and acquire goods to the value of debt.

A windfall is the term normally used for an unexpected financial gain. This could be in the form of an unexpected gift, inheritance or even lottery win.

The procedures whereby the assets of a company (or partnership) are gathered in and realised, the liabilities are met and any surplus is distributed to members.

A winding up order is an order from the court to compulsorily liquidate or close a limited company.

A winding up petition is a petition presented to the court seeking an order that a company be put into compulsory liquidation.

Applied to companies in liquidation where a director allowed the company to continue trading in circumstances where he should have concluded that there was no reasonable prospect that the company would avoid going into solvent liquidation. The directors involved may be made personally liable to make a contribution to the company’s assets.