Glossary of Debt Terms

This is a glossary of the most common debt terms.

Click on a letter below to jump straight to a list of terms beginning with that letter:



Administration Order

An administration order is a method of debt repayment when you can’t afford the full payment amount each month. The order will be administered by the courts. To qualify, you need to owe less than £5,000 and be the recipient of a county court judgement.


Arrears refer to missed payments. If you miss one month’s payment, you are in arrears by one month.

Arrestment (Scotland)

Applicable only for Scottish residents, arrestment is the method the Scottish courts can use to repay your debt. The courts freeze your bank account(s) and use the funds within to pay off debts.

Arrestment of Earnings (Scotland)

Applicable only for Scottish residents, an arrestment of earnings is a method the Scottish courts can use to pay your debts. Your employer will take money direct from your wage and pay it directly to creditors.


An asset is something of value which could be used to pay off the value of a debt.

Attachment of Benefits

An attachment of benefits is a method courts can use to repay a debt. The Department of Work and Pensions will directly source money from your benefits/support and pay it to any creditors.

Attachment of Earnings

Similar to arrestment of earnings and applicable for residents of England and Wales, an attachment of earnings is a method used by the courts to pay off your debts. Your employer will take money directly from your wage and pay it directly to any creditors.



Officials who have jurisdiction to remove another party’s goods/assets, bailiffs are employed by creditors to assume assets of their debtors equal to the debt.


Bankruptcy is the legal procedure whereby a persons debts are written off if they cannot repay the total in a reasonable amount of time. For further information on the process and fees involved, click here.


A budget is a list of your total income measured against your expenditure over a set period of time.

Budget Deficit

A budget deficit is the result of having a greater level of expenditure than income.

Budget Surplus

A budget surplus is the positive result of having more income than expenditure over a set period.


Budgeting is the process of organising your expenditure so it is equal to, or less than, your income.



Capital is the money used to make an investment or to generate further income.

Certificate of Satisfaction

A certificate of satisfaction is documentation from a court providing proof you have completed a payment.

Charge for Payment (Scotland)

Applicable only in Scotland, charge for payment is a legal notice notifying debtors they must pay off their full debt in a set time.

Charging Order

A charging order aligns an unsecured debt with property or land, turning it into a secured debt in the process.

Conditional Sale

A conditional sale is a credit agreement wherein you do not own the goods until all the payments have been completed.

Contractual Payment

A contractual payment is the payment amount agreed upon when the credit agreement was first signed.

County Court Judgement

A county court judgement (CCJ) is a court order which dictates a payment amount.

Credit File

A credit file is the file detailing all the money you have borrowed and all payments you have made towards a debt.

Credit Rating

Your credit rating is the information used by a creditor to determine whether or not to lend you money.


A creditor is the person, company, party or bank which lends you money.



Debt is the amount of money owed.

Debt Collection Agency

A debt collection agency is an organisation developed to chase outstanding debts.

Debt Consolidation

Debt consolidation refers to the acquisition of a loan to clear existing debts.

Debt Management Plan

A debt management plan is the restructuring of repayment plans, aligned to the financial situation of the debtor.

Debt Relief Order

A debt relief order is a method of writing off debts under £30,000 if you have no realistic means of paying them off.


A person or party who is in debt.

Decree (Scotland)

A decree is the order from the Scottish courts for missed payment of debts.

Diligence (Scotland)

Applicable only in Scotland, diligence is the term for debt enforcement by the Scottish courts.

Default Notice

A default notice is issued by a creditor when the terms of a credit agreement are broken.


A dependent is a person or party who relies on another financially.

Disposable Income

Disposable income is the money left over for non-essential items after all essential costs have been considered.



Equity refers to the amount of money invested in your house.


Your estate is the totality of everything you own and any rights to receive money or goods in the future.


Expenditure is your total outgoings or money spent.


Final Discharge

The final discharge is the court notice which demonstrates the end of your bankruptcy. The notice demonstrates you are now debt free.



Gross is the total value of money before any reductions are taken into consideration.


A guarantor is a person or party who agrees to pay off a debt if the debtor fails to do so.


Hire Purchase

A hire purchase is a form of credit agreement wherein you don’t own the goods until all the payments have been completed.



IFA stands for independent financial adviser – a person who offers advice on financial products.


Income is the money you receive through wages, pensions or benefits.

Income Support

Income support is the additional funds allocated to persons on a low level of income.


IVA stands for individual voluntary arrangement, a legally binding agreement between debtors and their creditors to repay the debt over a set time.


Insolvency is the legal process by which debts are written off. Forms of insolvency include bankruptcy, debt relief orders and trust deeds.


Interest is the charge for borrowing money or reward for saving money.

Irregular Bill

An irregular bill is a one-off payment, rather than one made on a regular basis.


Late Fees

Late fees are charges added to an account if a payment is made at a later date than originally agreed.


The power of levy is the entitlement of bailiffs to seize debtors’ goods.


Liability is your personal responsibility to make a payment.

LILA (Scotland)

A form of bankruptcy in Scotland, a LILA is suitable for debtors with low income and little assets.


Monthly Expenses

Monthly expenses are your regular outgoings on a month-to-month basis.


A mortgage is a secured loan, taken out to buy a house.


Non-Priority Debts

Non-priority debts are the less important debts, with lesser consequences if payments are missed.


Official Receiver

An official receiver is an official of the courts who deals directly with bankruptcy.


Payment Holiday

A payment holiday is a fixed period of time wherein a creditor allows lenders to cease making repayments.

Priority Debts

Priority debts are the debts with serious consequences if payments are missed. These include debts resulting from missed mortgage payments, utility payments and child benefit payments.



Repossession is the legal process by which mortgage lenders or secured loan providers take control of a home in the wake of missed payments.


Secured Loan

A secured loan is a loan which has been agreed upon with collateral (often property) offered.

Sequestration (Scotland)

Only applicable to Scottish residents, sequestration is a form of bankruptcy which writes off debts that cannot be repaid in a suitable amount of time.


If you sell an item for a lower amount than needed to make a repayment, this qualifies as a shortfall.

Standing Order

A standing order is an instruction to your bank to pay a certain party a set amount each month.

Statutory Demand

A statutory demand is a court order, demanding full payment of a debt within 21 days. The creditors can start bankruptcy proceedings if the payment is not made in the set time period.

Sub Prime Lending

Sub prime lending refers to lending money to people who have a poor credit history. Traditionally a higher rate of interest is charged.


Timer Order

A time order is the process of asking the courts to give you more time to pay off a debt if you cannot make a payment.

Trust Deed (Scotland)

Applicable only to Scottish residents, a trust deed is the legally binding agreement with your creditors to write off outstanding debts you cannot afford to pay.


Unsecured Loan

An unsecured loan (sometimes called a personal loan) is a loan without any collateral.


Warrant of Execution

A warrant of execution is a court order which gives bailiffs the right to recover a debt by taking possessions of the debtor.


For expert advice about coping with debt, visit the InControl homepage or call our dedicated team on 0800 072 6623.