AllClear Debt Help - UK Debt Insolvency and Bankruptcy definitions
Administration Order:
Individual:
An order made by a county court to arrange and administer the payment of debts.
Company:
An order made by a court, which appoints an administrator to take control of the company.
Bankruptcy:
Personal insolvency proceedings.
Please visit our bankruptcy section.
Charge:
Security interest taken over property by a creditor to protect against non-payment of their debt.
Charging Order:
An order made by the court, which gives the trustee a legal charge on the debtor's interest in their home.
Consolidate:
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. Often savings are made by converting unsecured debts to secured debts. This however puts the asset used as security at risk if payments are not maintained in full. Interest rates on secured loans are often lower than for unsecured loans because there is a lower risk of non-payment to the lender.
Please visit our consolidation section
Creditor:
Someone owed money.
Debt Management::
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.
Please visit our debt management section
Debtor:
A person who owes money.
Deed of Arrangement:
Arrangement proposed by the debtor for payments to their creditors (governed by the Deeds of Arrangement Act 1914).
Dividend:
Any sum distributed to unsecured creditors in an insolvency.
Fixed Charge:
A charge held over a specific asset. The asset cannot be sold without the consent of the secured creditor prior to repaying the amount secured by the charge.
Floating Charge:
A charge held over general assets of a company i.e. stock. The company can continue to use the asset without consent until the charge crystallises. This occurs on the appointment of an administrative receiver, on a winding-up petition or as otherwise provided for in the document creating the charge.
Guarantee:
A written agreement to pay a debt owed by a 3rd party.
Income Payments Order:
A court order for a debtor to pay part of their surplus salary/income to the trustee.
Individual Voluntary Arrangement (IVA):
A formal legally binding agreement between an individual who is unable to pay their creditors and a licensed Insolvency Practitioner. The Insolvency Practitioner will put together a form of proposals to the Creditors for approval and administer the IVA. The individual must be resident in England, Wales or Northern Ireland.
Please visit our Individual Voluntary Arrangement (IVA) section
Insolvency:
Having insufficient assets to meet all debts OR being unable to pay debts when they become due.
Insolvency Act 1986 / 2000:
Legislation bringing together insolvency law and procedures.
Insolvency Practitioner:
An authorised person who specialises in insolvency. They are authorised by the Secretary of State or by a recognised body (normally accountants/solicitors).
Legal Charge:
A form of security to ensure payment of a debt'
Liquidation:
It involves the realisation and distribution of the assets of a company or partnership. There are 3 types: compulsory, creditors voluntary and members voluntary.
Mortgage:
A type of secured loan
Official Receiver:
An officer of the court and civil servant employed by The Insolvency Service who deals with bankruptcies and compulsory company liquidations.
Preferential Creditor:
A creditor who is entitled to receive payment prior to other unsecured creditors.
Proof of Debt:
A statutory form completed by a creditor to state how much they are owed.
Receivership:
A company in administrative receivership.
Remortgage:
A secured loan taken to repay an existing mortgage but can also be used to raise additional funds in excess of the original debt.
Secured Loans:
A loan where the creditor holds security such as a mortgage or charge over a persons assets for monies owed. Failure to repay the debt can lead to the property being repossessed / sold.
Please visit our Loan and Remortgage section
Statement of Affairs:
A document sworn under oath stating details of the assets and debts and creditors of an individual/company.
Trust Deed:
A formal legally binding agreement between an individual who is unable to pay their creditors and a licensed Insolvency Practitioner (the Trustee). The Trustee will put together a form of proposals to the Creditors for approval and administer the Trust Deed. A Trust Deed is a form of informal bankruptcy and is regulated by The Bankruptcy (Scotland) Act 1985. The individual must be resident in Scotland.
Please visit our Trust Deed section
Unsecured Loans:
A loan where the creditor holds no specific security over a specific asset for the monies owed.
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