Annulment
Cancellation.

Arrears
This is a term used when a debt has not been paid on time and the payments become overdue.  If the debt is not paid then action may be taken against you to reclaim the money.

Assets
Anything that is owned by the individual or company which has a value either now or will have a value at some time in the future.  Examples include vehicles, shares, money in the bank or in hand, and property.

Bankruptcy
This is an option a person may use if they do not pay their debts as and when they become due. (See creditors petition for involuntary bankruptcy)

Bankruptcy order
A court order making an individual bankrupt.

Bankruptcy restrictions order or undertaking
A bankruptcy restriction order or undertaking is where a restriction is made against an individual.  This could result in bankruptcy restrictions continuing for a period of between 2 and 15 years.

CCJ
A CCJ (county court judgement) is a court action where an individual or company have taken you to court for unpaid debts.  The court will order you to pay the debt within a period of time; if you don’t then they will be entitled to take further action.

Charging order
This is an order made by the court giving the trustee in bankruptcy a charge on your interest in their home.  This will continue after they are discharged from bankruptcy.

Credit Rating
Banks and financial services use this as a tool.  If you were to request a loan from them they would check your credit rating.  A good rating may result in them lending more money.  A low score may mean a lesser amount is offered or the request refused.  The rating is assessed on whether there are any CCJ’s or any defaults on paying debts.

Creditors
This is anybody who is owed money.  It can also be someone who will (or may) be owed money in the future due to some obligation that has already been entered into.

Creditors petition (bankruptcy)
A person can only be made bankrupt if the debt is unsecured and for a fixed sum that may appear unable to pay.  Any individual owed more than £750 can petition to make you bankrupt. Bankruptcy can also be petitioned for by a group of people if the combined sum due to them is more than £750.  The proceedings will normally take place at your local county court with bankruptcy jurisdiction.

Debtors
These are individuals or companies that owe money to a third party for goods or services provided.

Debtors petition (bankruptcy)
This is where an individual declares themselves bankrupt by visiting their local county court and petitioning for bankruptcy.

Debts
These are monies that are owed to an individual or company for goods supplied or services provided.

Default notice
This is issued by a creditor before the commencement of legal action.  It will allow you seven days to pay the amount stated.  If this is not settled, then the creditor can take court action.

Directors
Directors are responsible for the running, management and control of a company. The limited liability of a company ensures directors are protected from personal risk; they must however act professionally and correctly to ensure this protection.

Distraint
This is used by landlords as a tool where there is unpaid rent.  Where a landlord has agreed a payment plan for rent and this is not adhered to  they have various options and can instruct an agent to enter the property and remove goods or assets to cover the value of the debt.  This can usually be carried out within one week of a missed payment.  They do not need a court judgement to implement these actions.

Factoring
Financial institutions provide this service. Companies receive payment for their unpaid sales invoices and the financial institution assist in the collection of the debts.  The factoring company takes a percentage of this debt as a fee.

HMRC – Her Majesty’s Revenue & Customs
A government department who regulates and collects customs and duties for instance VAT and PAYE.
 
Income payments agreement
This is an agreement entered into with an individual’s trustee where the individual agrees to pay him or her part of their wages, salary or any other income.  This would be for an agreed period of time.

Insolvency practitioner
An insolvency practitioner is usually an accountant or solicitor who has trained and specialised in insolvency.  They are authorised by the Secretary of State or other recognised professional bodies.

Insolvent
This is when a company or individual cannot afford to repay their debts as and when they are due, or whose liabilities are greater than their assets.

Interim Order
If a person is proposing to do an IVA they can apply for an interim order in court.  This protects them against any legal action which may be taken against them by anyone they owe money to.

Joint and Several Liability
If one or more person enters into an agreement (such as a mortgage or rent agreement), then all those named on the agreement are liable for the full amount.  An example of this would be a joint mortgage where the mortgage company can pursue either or both people named on the mortgage for any amounts outstanding.

Legal Charge
A form of security (eg a mortgage) to ensure payment of a debt.

Liabilities
Debts and obligations of the company or individual. An example of these would be bank loans, mortgages, credit cards or store cards.

Pension Fund
Contributions are paid and held to build up a fund to pay retirement pensions.

Personal Guarantee
This is a letter written by someone guaranteeing the payment of money lent to a third party (maybe a limited company).  So if the company defaults on the repayments then the lender will call on the personal guarantee to repay either part or all of the remaining debt.

Preferential creditor
A creditor who is entitled to receive payments prior to unsecured creditors.  These include employees and occupational pension schemes.

Redundancy
Redundancy is a form of dismissal.  It could be that the company is down sizing or closing a department or closing the whole company.  The staff are then made redundant as there is no longer available employment.

Sole trader
Are owners of small businesses.  With few if any employees.

Supervisor
When an individual or company enters into a Voluntary Arrangement a Supervisor of the Arrangement is appointed.  The Supervisor ensures that contributions are made as they fall due and kept up to date.  Failure to keep the contributions up to date could result in the Supervisor defaulting and failing the Voluntary Arrangement and this could lead to liquidation or bankruptcy.

Trustee
The Trustee in Bankruptcy is either the Official Receiver or an Insolvency Practitioner and will take control of your assets.  The Trustee’s main objective is to sell these assets and share the proceeds among the creditors.

Unsecured creditor
A creditor who does not hold security against an asset (a mortgage is a secured creditor).  Some unsecured creditors may be preferential creditors.

VAT – Value Added Tax
Is a duty levied on goods and services which are liable for VAT.  If you run a business you will usually have to register for VAT if your taxable turnover exceeds a level set by the Government.