The UK debt glossary
Every term you will meet in a letter, a court form or a conversation with an adviser — defined in plain English, with what it actually means for you rather than a dictionary definition.
Arrears
Payments you have missed and still owe. Being 'in arrears' on a priority bill such as rent or council tax is treated far more seriously than falling behind on a credit card, because the consequences are losing your home or facing enforcement rather than a damaged credit file.
Attachment of earnings
A court order requiring your employer to take money from your wages and send it to a creditor before you are paid. Your employer sees the order, which is why many people find this the most uncomfortable form of enforcement.
Bailiff
The everyday word for an enforcement agent. In England and Wales the correct term is enforcement agent for most civil debt, and High Court Enforcement Officer for High Court writs. Bailiffs recover debt on behalf of a creditor after a court order or a liability order.
Bankruptcy
A formal insolvency procedure that writes off qualifying debts, usually after 12 months, in exchange for your assets vesting in a trustee. It applies in England, Wales and Northern Ireland. Scotland's equivalent is sequestration.
Beneficial interest
Your actual financial share in a property, as opposed to whose name is on the deeds. It matters enormously in an IVA or bankruptcy because it determines what value can be claimed from your home.
Breathing Space
The Debt Respite Scheme in England and Wales. It freezes interest, fees and most enforcement for 60 days while you get advice. You must apply through an FCA-authorised debt adviser — you cannot apply directly.
CCJ
County Court Judgment. A court decision that you owe a debt. It stays on the Register of Judgments, Orders and Fines for six years unless you pay it in full within one month of judgment, in which case it can be removed.
Charging order
A court order securing an unsecured debt against your property. It converts a credit card debt into something attached to your home, and can eventually be followed by an application for an order for sale.
Controlled goods agreement
An agreement you sign with an enforcement agent listing goods they have taken control of. You keep using the items, but if you break the agreement they can return and remove them — and at that point they may be able to force entry.
Creditor
Anyone you owe money to. A creditor might be a bank, a utility company, a local authority, HMRC, a landlord or an individual.
DAS
The Debt Arrangement Scheme, a statutory Scottish scheme that freezes interest and charges while you repay your debts in full through a Debt Payment Programme. Nothing is written off, but you get legal protection while you pay.
DRO
A Debt Relief Order. Twelve months of protection, no payments, and write-off at the end — for people with qualifying debts of £50,000 or less, spare income of £75 a month or less, and assets under £2,000. Applied for through an approved intermediary.
Default
A creditor's formal statement that the agreement has broken down. A default notice usually comes first. The default is recorded on your credit file for six years from the date it was registered — not from when you clear the balance.
Deficit budget
A budget where your essential outgoings exceed your income. If you have a deficit budget, no repayment plan is sustainable, and the right conversation is about maximising income and considering a solution that does not require payments.
Discharge
The point at which you are released from bankruptcy and the qualifying debts are written off. Usually 12 months, though restrictions and payment obligations can outlast it.
Disposable income
What is left each month after essential living costs. It is the single figure that determines which debt solutions are realistic for you, which is why every adviser starts there.
Enforcement agent
See Bailiff. The legally correct term in England and Wales for the person instructed to recover debt after a court or liability order.
Equity
The value of your home above what is secured against it. For a protocol IVA your beneficial interest is calculated as 85% of the property value less secured borrowing, assessed once at the start. It sets whether the term is 60 or 72 months; it is not realised.
Full and final settlement
An agreement where a creditor accepts a lump sum that is less than the full balance and treats the debt as settled. Always get it in writing, and check whether it will be marked 'partially settled' on your credit file.
IVA
An Individual Voluntary Arrangement. A legally binding agreement to pay what you can afford, usually over five years, after which the remaining included debt is written off. Approved if creditors holding 75% by value of those voting agree.
Individual Insolvency Register
The public database of bankruptcies, DROs and IVAs in England and Wales, searchable by anyone at no cost. Being on it is one of the real costs of a formal solution.
Insolvency practitioner
A licensed professional authorised to act in formal insolvency procedures. They supervise IVAs and act as trustee in bankruptcy. Their licence is granted by a recognised professional body.
Liability order
A magistrates' court order confirming you owe council tax or business rates. It is the gateway to enforcement — once a council has one it can instruct enforcement agents, apply for an attachment of earnings, or take deductions from benefits.
Limitation
Under the Limitation Act 1980, most unsecured debts in England and Wales become statute-barred after six years with no payment and no written acknowledgement. The debt still exists but cannot be enforced through the courts. Council tax and mortgage shortfalls have different rules, and Scotland has a five-year period.
MAP
Minimal Asset Process, a low-cost route into Scottish bankruptcy for people with low debts, low income and almost no assets. It normally lasts six months.
Nominee
The insolvency practitioner who prepares your IVA proposal and puts it to your creditors. Once the arrangement is approved, the same person usually becomes the supervisor.
Priority debt
A debt where the consequence of not paying is losing something essential — your home, your energy supply, your liberty, or your goods. Rent, mortgage, council tax, energy, court fines, child maintenance and tax are priority debts. Credit cards and loans are not, however loud the letters are.
Protected Trust Deed
The Scottish equivalent of an IVA. Normally four years, administered by a trustee, recorded on the public Register of Insolvencies.
Sequestration
Scottish bankruptcy. Administered by the Accountant in Bankruptcy rather than the courts in most cases.
Statute-barred
A debt that is too old to be enforced through the courts. It is not written off and can still be requested, but a claim would fail if you raised limitation as a defence.
Supervisor
The insolvency practitioner who runs your IVA after approval — collecting payments, distributing to creditors, and reporting annually.
Token payment
A very small payment, often £1 a month, made to acknowledge a debt while you have nothing to pay. It keeps the debt from becoming statute-barred but demonstrates cooperation, and is usually a short-term measure while you get advice.
Variation
A formal change to an approved IVA, put to creditors for approval — for example reducing payments after a drop in income, or agreeing a payment break.
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