Terms Glossary

Adverse Credit History

Also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history and bad credit history, is a negative credit rating. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital

Bailiff

Can be appointed by the County Court if a lender has issued a CCJ which hasn’t been paid. A Bailiff is an official of court and has the power to seize goods and sell them at auction to settle a debt.

Bankruptcy

A legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, bankruptcy is initiated by the debtor (the bankrupt individual or organisation).

County Court Judgments

In England and Wales (Scotland has its own legal system), CCJs are legal decisions handed down by County Courts. Judgments for monetary sums are entered on the Register of County Court Judgments, which is checked by credit reference agencies to assess the credit-worthiness of individuals.

Charging Order

A charging order is an order from the court placed on a debtor's property (house or land) for monies owed to a lender. In basic terms, the unsecured debt becomes secured on the debtor's property.

Credit Crunch

A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks.

Credit rating

Assesses the credit worthiness of an individual. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender the probability of the subject being able to pay back a loan. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates.

Credit history / credit report

A record of an individual's past borrowing and repaying, including information about late payments and bankruptcy. A credit reference agency is a company that provides this credit information on individual borrowers.

In the United Kingdom, the main credit reference agencies for individuals are Experian, Equifax, and Callcredit.

Creditor

A party (e.g. person, organization, company, or government) that claims that a second party owes the first party some properties or services.

Debtor

Or a borrower - owes money to a creditor.

Debt consolidation

Entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt Management Plan

A DMP is an informal debt repayment arrangement, available in the United Kingdom, between a debtor and their creditors.

Full and Final Settlement

An offer to repay a percentage of the debt, on the condition the creditor agrees to write off the rest of the debt.

Hire purchase

Frequently abbreviated to HP - is the legal term for a conditional sale contract. In cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase contract allows the buyer to hire the goods for a monthly rent.

Mortgage loans

Generally refer to a loan secured by residential property, often for the purpose of acquiring the residence. Mortgage loans may be lower priced than other forms of borrowing because the value of the property reduces risk for the lender.

IVA

In the United Kingdom, Individual Voluntary Arrangements (IVAs) are a formal alternative for individuals wishing to avoid petitioning for their own bankruptcy.

The aim of an IVA is to help you clear your debts at a reduced level over a fixed term, usually over a period of 5 years. Through the duration of the IVA you won't receive any further contact from your creditors, plus all interest and charges will be frozen.

Notice of default

A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline.

Overdraft

An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn"

If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

Remortgage

Also known as refinancing - is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.

Repossession

Repossession is a legal process that occurs when a lender obtains a court order to take possession of a property due to non payment of the mortgage.

Secured loan

A loan in which the borrower pledges some asset (e.g. a car) as collateral for the loan. The loan is thus secured against the collateral — in the event that the borrower defaults, the lender takes possession of the asset used as collateral and may sell it to regain the amount originally lent to the borrower.

Statutory Demand

A formal notice requiring payment of a debt within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced without further notice (Cannot be used where the debt is disputed).

Store card

A type of credit card associated with a retailer or group of retail stores which can only be for purchases from the retailers concerned.

Unsecured debt

A financial term that refers to any type of debt that is not collateralized by any specified assets in the event of default.

Unsecured loans

Loans that are not guaranteed with any asset, so that the risk of repossession does not exist. Though the lender can still take legal action in order to recover the money, such a legal process would be significantly longer and more expensive than with secured loans. Typical unsecured loans are credit card debt, bank overdrafts, and personal loans.

Trust Deed

The PTD is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.

Trustee

A legal term that refers to a holder of property on behalf of some other beneficiary. Can be the Offical Receiver in Bankruptcy or Insolvency Practitioner in an IVA.

Sequestration

The act of removing, separating or seizing anything from the possession of its owner, particularly in law, of the taking possession of property under process of law for the benefit of creditors or the state.


 
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Terms Glossary - See Beyond20/20
Terms Glossary

Adverse Credit History

Also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history and bad credit history, is a negative credit rating. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital

Bailiff

Can be appointed by the County Court if a lender has issued a CCJ which hasn’t been paid. A Bailiff is an official of court and has the power to seize goods and sell them at auction to settle a debt.

Bankruptcy

A legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, bankruptcy is initiated by the debtor (the bankrupt individual or organisation).

County Court Judgments

In England and Wales (Scotland has its own legal system), CCJs are legal decisions handed down by County Courts. Judgments for monetary sums are entered on the Register of County Court Judgments, which is checked by credit reference agencies to assess the credit-worthiness of individuals.

Charging Order

A charging order is an order from the court placed on a debtor's property (house or land) for monies owed to a lender. In basic terms, the unsecured debt becomes secured on the debtor's property.

Credit Crunch

A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks.

Credit rating

Assesses the credit worthiness of an individual. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender the probability of the subject being able to pay back a loan. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates.

Credit history / credit report

A record of an individual's past borrowing and repaying, including information about late payments and bankruptcy. A credit reference agency is a company that provides this credit information on individual borrowers.

In the United Kingdom, the main credit reference agencies for individuals are Experian, Equifax, and Callcredit.

Creditor

A party (e.g. person, organization, company, or government) that claims that a second party owes the first party some properties or services.

Debtor

Or a borrower - owes money to a creditor.

Debt consolidation

Entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt Management Plan

A DMP is an informal debt repayment arrangement, available in the United Kingdom, between a debtor and their creditors.

Full and Final Settlement

An offer to repay a percentage of the debt, on the condition the creditor agrees to write off the rest of the debt.

Hire purchase

Frequently abbreviated to HP - is the legal term for a conditional sale contract. In cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase contract allows the buyer to hire the goods for a monthly rent.

Mortgage loans

Generally refer to a loan secured by residential property, often for the purpose of acquiring the residence. Mortgage loans may be lower priced than other forms of borrowing because the value of the property reduces risk for the lender.

IVA

In the United Kingdom, Individual Voluntary Arrangements (IVAs) are a formal alternative for individuals wishing to avoid petitioning for their own bankruptcy.

The aim of an IVA is to help you clear your debts at a reduced level over a fixed term, usually over a period of 5 years. Through the duration of the IVA you won't receive any further contact from your creditors, plus all interest and charges will be frozen.

Notice of default

A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline.

Overdraft

An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn"

If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

Remortgage

Also known as refinancing - is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.

Repossession

Repossession is a legal process that occurs when a lender obtains a court order to take possession of a property due to non payment of the mortgage.

Secured loan

A loan in which the borrower pledges some asset (e.g. a car) as collateral for the loan. The loan is thus secured against the collateral — in the event that the borrower defaults, the lender takes possession of the asset used as collateral and may sell it to regain the amount originally lent to the borrower.

Statutory Demand

A formal notice requiring payment of a debt within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced without further notice (Cannot be used where the debt is disputed).

Store card

A type of credit card associated with a retailer or group of retail stores which can only be for purchases from the retailers concerned.

Unsecured debt

A financial term that refers to any type of debt that is not collateralized by any specified assets in the event of default.

Unsecured loans

Loans that are not guaranteed with any asset, so that the risk of repossession does not exist. Though the lender can still take legal action in order to recover the money, such a legal process would be significantly longer and more expensive than with secured loans. Typical unsecured loans are credit card debt, bank overdrafts, and personal loans.

Trust Deed

The PTD is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.

Trustee

A legal term that refers to a holder of property on behalf of some other beneficiary. Can be the Offical Receiver in Bankruptcy or Insolvency Practitioner in an IVA.

Sequestration

The act of removing, separating or seizing anything from the possession of its owner, particularly in law, of the taking possession of property under process of law for the benefit of creditors or the state.


 
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