Glossary of Debt

Administrator
The insolvency practitioner appointed by the court to handle the affairs of a company the subject of an administration order. (Back to Debt Glossary)

Administration Orders
An Administration Order may apply if you have at least one County Court Judgment against you and total debts do not exceed Ј5,000. It allows a County Court to administer payments to all your creditors. One payment is made to the court and the court splits this between all creditors according to how much you owe. As long as an Order is in force, creditors cannot take further enforcement action and interest is stopped. (Back to Debt Glossary)

Administration Receiver
The person appointed by the holder of a floating charge debenture over a company's assets to collect in and realise the assets of that company and to repay the indebtedness to the debenture holder. (Back to Debt Glossary)

Administrative Receivership
The term applied when an insolvency practitioner is appointed as an administrative receiver. (Back to Debt Glossary)

Agricultural Receivership
A special remedy to take control of the assets of a farmer under the Agricultural Credits Act 1928. (Back to Debt Glossary)

Assignment
If a creditor sells the debt to another company, this is assignment and shouldn't be confused with a creditor passing the debt to a collection agency that acts on behalf of the creditor. (Back to Debt Glossary)

Arbitration
A meeting with the debtor, lenders, and a third party. This is done to see if an agreement can be met without going to trial. (Back to Debt Glossary)

Arrears
Arrears occur when you fail to meet the contractual payments to your household bills. Missing payments to your mortgage, rent or council tax etc can lead to serious arrears, which must be paid immediately. You can also be in arrears if you don't maintain your payments on unsecured debts. Arrears will accumulate if you continue to miss payments and you will be required to pay an additional amount on top of the regular payments until the arrears are cleared. (Back to Debt Glossary)

Assets
Assets are items you own that have monetary value. Assets would include your property, car, stocks, shares, antiques and savings etc. (Back to Debt Glossary)

Associates
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. (Back to Debt Glossary)

Attachment
The courts seize a debtor's property. (Back to Debt Glossary)

Attachment of Benefits
Similar to Attachment of Earnings, if you fail to make the repayments once a county court judgment has been issued the council may take deductions from your benefit. They are made at the rate of 5% of the personal allowance for a single claimant aged 25 and above. The attachments of benfits will continue until the debt is discharged. (Back to Debt Glossary)

Attachment of Earnings
If you fail to pay money as ordered in a County Court Judgement, the creditor can apply to the court to have money deducted from your wages. Deductions are made at the rate of payment decided by the court as reasonable. (Attachment of Earnings Orders for Council Tax are dealt with by the Magistrates Court under a different system). (Back to Debt Glossary)

Authorised (or licensed) Insolvency Practitioner
The person (usually an accountant or solicitor) authorised by the Department of Trade and Industry (DTI) or a professional body to act as trustee, nominee, supervisor, liquidator, administrative receiver or administrator. Only such a person can hold any of these offices. (Back to Debt Glossary)

B

Bailiffs
Employed mainly by the Court to enter into your property and take goods to sell at auction to cover debt that you owe to a lender who has previously issued a CCJ to which you have failed to pay. (Back to Debt Glossary)

Balloon Payment
A lump sum payment on a hire purchase or conditional sale agreement once some monthly payments have been made. (Back to Debt Glossary)

Balance
Money owed on an existing loan. (Back to Debt Glossary)

Bankrupt
When someone has declared insolvent in a court of law. Most debts are forgiven and most assets are turned over to the court. (Back to Debt Glossary)

Bankruptcy
A legal procedure that writes off all debts (with a few exceptions). You or one of your creditors can petition for bankruptcy. The debt is usually discharged after two to three years. However, if there is any equity in a bankrupts home or other assets, they will usually be sold to repay debts. (Back to Debt Glossary)

Bond
Insurance cover needed by a person who acts as an insolvency practitioner. (Back to Debt Glossary)

C

Capital
Assets of money of a person or company. (Back to Debt Glossary)

Cancellation of Debt
Where a creditor forgives debt owed. (Back to Debt Glossary)

Certificate of Satisfaction
A certificate issued by the court to prove a CCJ or Attachment of Earnings has been paid. A fee of Ј10 is required. (Back to Debt Glossary)

Charge for Payment
A document served in Scotland, where the debtor has been ordered to pay an outstanding debt within a given timescale. Similar to a County Court Judgement in England and Wales. (Back to Debt Glossary)

Charge
The appropriation of real or personal property for the discharge of a debt without giving the creditor any property in, or possession of, the subject of security. (Back to Debt Glossary)

Charging Orders
The Charging Orders Act 1979 allows creditors with a high court judgemnet or county court judgment the ability to secure the debt to assets. A charging order cant be made unless payments have been defaulted during the CCJ. (Back to Debt Glossary)

Chapter 7 Bankruptcy
A person goes to bankruptcy court where most debts are forgiven and most assets are seized. (Back to Debt Glossary)

Chapter 13 Bankruptcy
A person goes to bankruptcy court where they are told to setup a repayment schedule for paying off existing debts. (Back to Debt Glossary)

Company Directors Disqualification Act (1986)
Consolidation Act on the disqualification of directors. (Back to Debt Glossary)

Company Voluntary Agreement (CVA)
A voluntary agreement for a company is a procedure whereby a plan of reorganisation or composition in satisfaction of debts, is put forward to creditors and shareholders. There is limited involvement by the court and the scheme is under the control of a supervisor. (Back to Debt Glossary)

Composition
An agreement between debtor and his creditors whereby the compounding creditors agree with the debtor between themselves to accept from the debtor payment of less than the amounts due to them in full satisfaction of their claim. (Back to Debt Glossary)

Compulsory Liquidation
The placing of a company into liquidation as a result of an application to the court, usually by a creditor. (Back to Debt Glossary)

Company Voluntary Arrangement
This is the equivalent to an Individual Voluntary Arrangement, but for businesses. Allowing any financial problems to be overcome with the creditors consent so that the business can continue to trade. (Back to Debt Glossary)

Consolidate Debt
Debt consolidation is the process of taking out a single, larger loan to pay off some / all your existing debts. Simplifying your finances, this can reduce the interest you're paying as well. Debt consolidation can also reduce your monthly payments by spreading the loans over a longer term - although this could well increase the total amount you end up repaying, as well as the time you spend repaying it. (Back to Debt Glossary)

Contractual Payments
These are the payments you agreed to pay each month when you signed the credit agreement. Failing to make the contractual payments can lead to arrears and this can affect you credit rating. (Back to Debt Glossary)

County Court Judgment
A judgement issued by the court in order for you to make payments to a debt you owe when you have failed to keep to an original agreement with the lender and not made any attempts to come to an agreement of repayment. (Back to Debt Glossary)

Court-Appointed Receiver
A person, not necessarily a licensed insolvency practitioner, appointed to take charge of assets usually where they are subject to some legal dispute. Not strictly an insolvency process, the procedure may be used other than for a limited company, e.g. to settle a partnership dispute. (Back to Debt Glossary)

Court Claim Form
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. (Back to Debt Glossary)

Credit Counseling
A debt relief solution where you will work with your creditors via lower rates and a repayment plan. (Back to Debt Glossary)

Credit File
A file held by authorised companies with financial history regarding credit applications and credit you have borrowed. (Back to Debt Glossary)

Credit Repair
blurb (Back to Debt Glossary)

Credit Score
A rating banks and financial institutions used to evaluate a persons ability to pay back a loan. (Back to Debt Glossary)

Creditors
A person or company whom lends you money (usually a bank, building society or credit card company). (Back to Debt Glossary)

Creditors’ Committee
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. (Back to Debt Glossary)

Creditors Voluntary Liquidation (CVL)
Relates to an insolvent company. It is commenced by resolution of the shareholders, but is under the effective control of creditors, who can choose the liquidator, liquidation committee. (Back to Debt Glossary)

D

Debenture
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. Often also referred to as a floating charge, and the lender is often referred to as the debenture holder. (Back to Debt Glossary)

Debt
An amount of money owed to a lender include interest and fees. (Back to Debt Glossary)

Debt Advice
When someone uses a financial expert to pay off debt. (Back to Debt Glossary)

Debt Relief
A reduction of debt owed via settlement, consolidation, or similar debt programs. (Back to Debt Glossary)

Debt Settlement
A form of debt relief where you work with your creditors and agree to a lesser amount owed. (Back to Debt Glossary)

Debt Help
Used to describe services that help in dealing with debt. (Back to Debt Glossary)

Debt Collection Agency
Creditors can employ or sell the debt to a debt collection agency that will chase the outstanding debt. They are not Bailiffs and have very little power to collect the debt and should be treated the same as any other unsecured creditor. (Back to Debt Glossary)

Debt Consolidation
Debt consolidation is the process of taking out a single, larger loan to pay off some / all your existing debts. Simplifying your finances, this can reduce the interest you're paying as well. Debt consolidation can also reduce your monthly payments by spreading the loans over a longer term - although this could well increase the total amount you end up repaying, as well as the time you spend repaying it. (Back to Debt Glossary)

Debt Management
Debt management can help you repay your debts in an affordable way without taking out any further credit. It involves negotiating the terms of your debt (such as interest & repayments) with your creditors. Some people do this themselves; others ask debt management professionals to do it for them. (Back to Debt Glossary)

Debtor
A debtor is someone who is in debt and is required to repay their creditors. (Back to Debt Glossary)

Deed of Arrangement
Method for an individual (not a company) to come to terms with creditors short of formal bankruptcy, it has now been almost completely replaced by Individual Voluntary Arrangements. (Back to Debt Glossary)

Default Notice
A notice issued by a creditor when a financial agreement that was been made between you and your creditor fails because the arrangement has not been kept. A default notice is the lender informing you that they are intending to take step to recover the money you owe them. (Back to Debt Glossary)

Deduction from Earnings
An order made by the Child Support Agency to make deductions for maintenance. No court order is necessary (unlike an Attachment of Earnings Order). (Back to Debt Glossary)

Deficit
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. (Back to Debt Glossary)

Dependent
People who rely on others for their living requirements and have no income of their own, for example children and homemakers. (Back to Debt Glossary)

Distress
This is the right for anyone whom rent is payable to, to sell debtors goods to contribute to the rent arrears. (Back to Debt Glossary)

Disqualification of Directors
A director found to have conducted the affairs of an insolvent company in an "unfit" manner may be disqualified, on application to the court by the DTI, from holding any management position in a company for between 2 and 15 years. (Back to Debt Glossary)

E

Earnings Arrestment
The Scottish equivalent to an Attachment of Earnings Order. Where the court can order monies to be deducted from the debtors wages to repaying an outstanding debt. (Back to Debt Glossary)

Equity
This 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. (Back to Debt Glossary)

Exemptions
When property or money is declared exempt from a creditors ability to seize in court. (Back to Debt Glossary)

Ex parte (also known as 'Without Attendance')
This is a term used when applications are made to court without anyone attending in person. (Back to Debt Glossary)

Extortionate Credit Transaction
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. Such a transaction may be challenged by an administrator, a liquidator or a trustee in bankruptcy. (Back to Debt Glossary)

F

Final Discharge
A finial discharge will be posted to you to show the end of your bankruptcy. This document will mean you are free from debt and the bankruptcy is over. (Back to Debt Glossary)

Fixed Charge
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. (Back to Debt Glossary)

Floating Debt
Refinanced short term debt. (Back to Debt Glossary)

Floating Charge
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). (Back to Debt Glossary)

Fraud
Deliberately deceiving someone with false information about yourself in order to gain an advantage. (Back to Debt Glossary)

Fraudulent Trading
Where a company has carried on business with intent to defraud creditors, or for any fraudulent purpose. It is a criminal offence and those involved can be made personally liable for the company's liabilities. (Back to Debt Glossary)

Funded Debt
Loans longer than a year. (Back to Debt Glossary)

G

Garnishment
When a creditor has a court approve the creditors ability to take money owed via the debtor's employer or bank account (Back to Debt Glossary)

Going Concern
Basis on which insolvency practitioners prefer to sell a business. Effectively it means the business continues, jobs are saved, and a higher price is obtained. (Back to Debt Glossary)

Guarantees
When a person has assured the creditor that the debtor will make the repayments. If the debtor fails to make the payments the guarantee will be liable for them. (Back to Debt Glossary)

H

Hire Purchase
The pre-agreed purchase of an asset where the asset is in your possession as long as repayments are kept to. Once full payment is made the asset becomes the property of the consumer. (Back to Debt Glossary)

I

Income Payments Order
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. (Back to Debt Glossary)

Informal Arrangement
This is the simple term for arranging reduced payments to your creditors without the assistance of a third party. (Back to Debt Glossary)

Individual Voluntary Arrangement (IVA)
A voluntary arrangement for an individual is a procedure whereby the person comes to an arrangement with his creditors in how their debt will be discharged. Such a scheme requires the approval of the court and is under the control of a supervisor. (Back to Debt Glossary)

Interest
The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. (Back to Debt Glossary)

Interim Order
An individual who intends to propose a voluntary arrangement to his creditors may apply to the court for an interim order which, if granted, precludes bankruptcy and other legal proceedings whilst the order is in force. (Back to Debt Glossary)

Insolvency
Having insufficient funds to meet all debts, or being unable to pay debts as and when they fall due. (Back to Debt Glossary)

Insolvent Liquidation
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. (Back to Debt Glossary)

Insolvency Practitioner
A person who specialises in insolvency, they are recognised by the appropriate board and are fully qualified to deal with your insolvency. (Back to Debt Glossary)

Insolvency Rules
The Insolvency Rules 1986, as amended, provide the detailed working procedures for the provisions of the Insolvency Act 1986. (Back to Debt Glossary)

Insolvency Rules (IA 1986)
The Insolvency Rules 1986 (as amended) these Rules apply where the Act applies. Where the old Act continue to apply so do the Bankruptcy Rules 1952 and the Companies (Winding Up) Rules 1949. There are separate rules dealing with insolvent partnerships, insolvent deceased's estates and deeds of arrangement. (Back to Debt Glossary)

J

Joint & Several Liability
When you take out a credit agreement, such as a loan or overdraft in joint names (with another person) then you are both liable for the full amount of any debt. (Credit cards are not normally in joint names, although you may have two cards, only one person with be the account holder). This means that if one of you fails to repay the debt (this can occur following divorce or separation) then the creditor could still ask you for payment of the full amount (you are not just responsible for your "half" of the debt). (Back to Debt Glossary)

Judgment
In the event you are sued and lose the case, the creditor wins a judgment, which allows them to garnish your wages, put a lien against your property, or levy your bank account depending on your state laws. (Back to Debt Glossary)

L

Legal assets
Any property that can be used for repayment of a debt. (Back to Debt Glossary)

Lender
A person or company whom lends you money (usually a bank, building society or credit card company). (Back to Debt Glossary)

Levy
When the bailiff retrieves payment or goods to raise the sum on the warrant and costs. Notice of this comes 7 days before the bailiffs arrive. (Back to Debt Glossary)

Lien
A notice associated to your property that you owe a lender. (Back to Debt Glossary)

Liabilities Orders
This order follows no payment of 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. (Back to Debt Glossary)

Liquidation (also known as "winding-up")
When a business/company is terminated or made bankrupt, all company assets are sold off and the proceeds go to pay the creditors. Any remaining money is distributed between the shareholders. (Back to Debt Glossary)

Liquidation Committee
Committee of creditors who receive information from the liquidator and sanction some of his actions. (Back to Debt Glossary)

Law of Property Act 1925 (LPA)
Governs transactions in law and property. Contains statutory powers of receivers appointed under a fixed charge. (Back to Debt Glossary)

LPA Receiver
Law of Property Act 1925 receiver: 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. Common in the case of failure of a property developer, whose borrowings will largely be secured on specific properties. (Back to Debt Glossary)

M

Mareva Injunction
Court order preventing the disposal of assets. (Back to Debt Glossary)

Members’ Voluntary Liquidation (MVL)
A solvent liquidation where the shareholders appoint the liquidator to realise assets and settle all the company's debts in full within 12 months. (Back to Debt Glossary)

Misfeasance
Breach of duty in relation to the funds or property of a company by its directors or managers. (Back to Debt Glossary)

Mortgage
A transfer of an interest in land or other property by way of security, redeemable upon performing the condition of paying a given sum of money. (Back to Debt Glossary)

N

Nominee
The person chosen by the individual or corporate debtor to report on the debtor's proposals for an IVA or CVA. (Back to Debt Glossary)

Non-priority Creditors
Non-payments to these creditors (sometimes known as secondary creditors) would incur less severe consequences than the non-payment of priority creditors (see below). (Back to Debt Glossary)

O

Office Holder
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. (Back to Debt Glossary)

Official Receiver (or Trustee in Bankruptcy)
The Official Receiver (or Trustee in Bankruptcy) deals with the administration for the bankrupts. 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. (Back to Debt Glossary)

Onerous Property
The term onerous property in the context of a liquidation or bankruptcy, applies to unprofitable contracts and to property that is unsaleable 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. (Back to Debt Glossary)

P

Petition
A written application to the court for relief or remedy (Back to Debt Glossary)

Policyholders Protection Act 1975
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. (Back to Debt Glossary)

Preference
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. (Back to Debt Glossary)

Preferential Creditor
Defined in Schedule 6 of The Insolvency Act 1986. Has priority when funds are distributed by a liquidator, administrative receiver or trustee in bankruptcy. (Back to Debt Glossary)

Priority Creditors
Those where non-payment could result in loss of property, essential services or imprisonment, e.g. mortgage, rent, gas, water, electricity, Council Tax, court fines and maintenance. (Back to Debt Glossary)

Proof of Debt Form
A form the creditor can submit to state their claim in an IVA or bankruptcy. (Back to Debt Glossary)

Proof of Debt
The document submitted in an insolvency to establish a creditor's claim. It may be informal (by e.g. letter) or in a prescribed form (in bankruptcy and compulsory liquidations). (Back to Debt Glossary)

Property Restriction
During an IVA a creditor may put a restriction on your property. Usually the restriction will only apply during the time of the arrangement. (Back to Debt Glossary)

Pro-Rata
This means "in proportion to." For example, if you owe Barclaycard Ј100, HSBC Ј900 and have Ј100 to pay them each month, the pro-rata payment to Barclaycard would be Ј10 per month and Ј90 per month to HSBC. (Back to Debt Glossary)

Proving
A creditor who claims is referred to as "proving" for his debt, and the document by which he seeks to establish his claim is his "proof". (Back to Debt Glossary)

Provisional Liquidator
The person appointed by the court to deal with the affairs of the company until a compulsory winding up order. (Back to Debt Glossary)

Proxy
Creditors rarely attend creditors meeting; they assign a proxy to attend and vote on their behalf. (Back to Debt Glossary)

Proxyholder
A person who is authorised to attend a meeting on behalf of someone else. (Back to Debt Glossary)

R

Receiver
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. (Back to Debt Glossary)

Receivership
The general term applied when a person is a appointed as a receiver or administrative receiver over certain assets. (Back to Debt Glossary)

Reservation of Title or Retention of Title Agreement
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. (Back to Debt Glossary)

Right to Off-Set
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. (Back to Debt Glossary)

S

Secured Debt
Money borrowed that is secured on an asset, i.e. house, car or furniture, if terms of payment are not kept to, the lender may demand the monies back by the sale or return of the asset that money was secured on. (Back to Debt Glossary)

Security
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. Security documents can be very complex. The commonest example is a mortgage over a property. (Back to Debt Glossary)

Shadow Director
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. However, a person is not a shadow director merely because the directors act on advice given by him in a professional capacity. (Back to Debt Glossary)

Statutory Demand
A statutory demand is a legal document requiring the debtor to pay an outstanding debt in instalments or as a lump sum, or to secure it against a property. (Back to Debt Glossary)

Special Manager
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. (Back to Debt Glossary)

Surplus Income (Available Surplus)
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. (Back to Debt Glossary)

Supervisor
The person appointed to supervise the implementation of the debtor's proposals for an IVA or CVA once approved by creditors (and members). (Back to Debt Glossary)

T

Time Orders
Permits the court to make changes to the consumer credit agreement, very useful if the creditor won't freeze interest or agree to the payments. (Back to Debt Glossary)

Token Payments
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 Ј1.00 each per month, but it is better to send this "token payment" than send nothing at all. (Back to Debt Glossary)

Transactions at an Undervalue
If, prior to bankruptcy proceedings, a debtor attempts to transfer an asset (such as a property, vehicle or expensive item) into the name of a family member or friend, in the hope that it will be excluded from the bankruptcy estate, the Official Receiver or Trustee can examine the debtors previous finances (up to 10 years prior to the bankruptcy) to establish if the asset was transferred for less than the market value. For example, if the debtor had sold a property to a friend for Ј1.00 and then attempted to go bankrupt 8 years later, with the hope of regaining the property once the bankruptcy had been discharged, the OR can apply to have the property sold and any equity realised for the benefit of the creditors. This is known as a "Transaction at an Undervalue". (Back to Debt Glossary)

Trustee
Either the official receiver or the insolvency practitioner who will take control of the selling of assets during an IVA or bankruptcy. (Back to Debt Glossary)

U

Undischarged Bankrupt
Someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy. (Back to Debt Glossary)

Unsecured Creditors
Strictly, any creditor who does not hold security. More commonly used to refer to any ordinary creditor who has no preferential rights, although, in fact preferential creditors will almost always also be unsecured. In any event, the last in the queue, ahead only of the shareholders. (Back to Debt Glossary)

Unsecured Debt
Refers to a loan, credit card, store card or catalogue where monies are not secured on any asset or property. (Back to Debt Glossary)

V

Variation Orders
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. (Back to Debt Glossary)

VAT Bad Debt Relief
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. (Back to Debt Glossary)

Voluntary Liquidation
The placing of the company into liquidation by resolution of the members - there are two types of voluntary liquidation
member's voluntary liquidation; and creditor's voluntary liquidation. The first of these does not involve insolvency and comes about merely because the (shareholders) members wish to have the value of their shareholding realised e.g. on the retirement of the principals of the company was incorporated has been fulfilled. (Back to Debt Glossary)

W

Warrant of Arrest
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. (Back to Debt Glossary)

Warrant of Execution
When debtors have failed to pay the CCJ and no variation orders have been made, bailiffs can go to property and acquire goods to the value of debt. (Back to Debt Glossary)

Winding-Up
(Or liquidation) - the procedure whereby the assets of a company (or partnership) are gathered in and realised, the liabilities met and the surplus, if any, distributed to members. (Back to Debt Glossary)

Winding-up Order
The order made by the court for a company to be placed in compulsory liquidation. (Back to Debt Glossary)

Winding-up Petition
A winding-up petition is a petition presented to the court seeking an order that a company be put into compulsory liquidation. (Back to Debt Glossary)

Wrongful Trading
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. (Back to Debt Glossary)