Glossary

A

• Accountant

  A professional who prepares, reviews or advises on financial records, tax and business finances. In debt situations, accurate figures are often the starting point for a workable strategy.

• Accountant in Bankruptcy (AiB)

  The Scottish public body responsible for overseeing bankruptcy, protected trust deeds and the Debt Arrangement Scheme in Scotland.

• Acknowledgment of debt

  A written or other clear admission that a debt is owed. Depending on the circumstances, it can affect the time limit for enforcing the debt.

• Administration

  A formal company insolvency process where an administrator takes control to protect the business or its assets while seeking the best available outcome for creditors.

• Administration order

  A court-managed debt arrangement in England and Wales for those with qualifying judgment debt and debts within the legal limit. One regular payment goes to the court and is shared among creditors.

• Administrative receiver

  An insolvency practitioner appointed by certain secured lenders under older qualifying security arrangements to recover money from a company’s assets.

• Administrative restoration

  A Companies House process that can restore certain dissolved companies to the register without a court order, where the legal conditions are met.

• Administrator

  A licensed insolvency practitioner appointed to manage a company in administration and pursue one of the statutory purposes of that process.

• Affordability

  A practical assessment of what someone or a business can genuinely pay after allowing for reasonable essential costs and commitments.

• After-acquired property

  Property obtained after a bankruptcy order that may, in certain circumstances, have to be claimed for the bankruptcy estate.

• All-monies clause

  A clause in a guarantee or security document that can make the security cover all amounts owed to the lender, not just one specific loan.

• Annulment

  The legal cancellation of a bankruptcy order, usually because the order should not have been made or the bankruptcy debts and costs have been dealt with as required.

• Antecedent transaction

  A transaction entered into before insolvency that may later be reviewed, challenged or reversed under insolvency law.

• Apparent insolvency

  A Scottish legal concept showing that a debtor appears unable to pay debts, often based on specified events or formal creditor action.

• Approved intermediary

  A trained and authorised debt adviser who can help an eligible person apply for a Debt Relief Order in England and Wales.

• Arrears

  Money that should already have been paid under an agreement, bill or tax obligation but remains outstanding.

• Arrestment

  A Scottish form of debt enforcement that can freeze or attach money or property held by a third party, such as funds in a bank account.

• Arrest of discharge

  A Northern Ireland bankruptcy term for a court postponing or suspending discharge, typically where the bankrupt has not fulfilled duties or cooperated with the insolvency process.

• Asset-backed lending

  Finance secured against assets such as property, stock, equipment or receivables. The lender’s position depends on the security it holds.

• Asset dissipation

  The reduction, transfer or disposal of assets in a way that diminishes what may be available to creditors. Transactions can be challenged if they breach legal duties.

• Asset finance

  Funding used to acquire or use business assets, often with the asset itself providing security for the finance.

• Asset financing

  Another term for asset finance: funding structured around equipment, vehicles or other assets rather than relying only on unsecured borrowing.

• Asset realisation

  The process of selling or otherwise converting assets into money, often so funds can be distributed in an insolvency or enforcement process.

• Assets

  Things of value owned by a person or business, such as cash, property, vehicles, equipment, investments or money owed by customers.

• Assignee

  The person or organisation that receives rights under an assignment, such as the right to collect a transferred debt.

• Assignment

  The legal transfer of a right, contract benefit or debt from one party to another, subject to the terms and law applying to it.

• Assignment of debt

  The transfer of a creditor’s rights in a debt to another party, which may then become entitled to collect or enforce it.

• Assignment of lease

  The transfer of a tenant’s interest in a lease to another party, usually subject to the lease terms and any required landlord consent.

• Assignor

  The person or organisation transferring a right or interest to another party under an assignment.

• Attachment of Earnings Order

  A court or enforcement order requiring an employer to deduct money from a debtor’s wages and pay it towards a judgment debt.

• Authority to act

  Permission given by a client allowing an adviser or representative to communicate and negotiate with creditors on the client’s behalf.

• Automatic discharge

  The point at which a person is released from most bankruptcy restrictions automatically after the statutory period, unless the law provides otherwise.

• Available credit

  The amount of an agreed credit limit that remains unused and can still be drawn, subject to the lender’s terms.

B

• Bailiff

  A commonly used term for an enforcement agent who may take enforcement action after the necessary legal authority has been obtained.

• Balance-sheet insolvency

  A position where a company’s liabilities exceed the value of its assets, taking relevant future and contingent liabilities into account.

• Balance sheet

  A snapshot of a business’s assets, liabilities and equity at a particular date. It helps show the financial position, not just cash in the bank.

• Bank arrestment

  A Scottish enforcement measure that can freeze money held in a debtor’s bank account, subject to statutory rules and protections.

• Bankrupt

  A person who is subject to a bankruptcy order or equivalent bankruptcy process. Different rules apply in different UK jurisdictions.

• Bankruptcy

  A formal personal insolvency process that deals with debts a person cannot pay, while placing their assets and financial affairs under legal rules and oversight.

• Bankruptcy (Scotland)

  The Scottish personal insolvency process, commonly called sequestration, under which a trustee administers the debtor’s estate for creditors.

• Bankruptcy (Scotland) Act 2016

  The principal Scottish legislation governing bankruptcy and related debt procedures in Scotland, as amended from time to time.

• Bankruptcy adjudicator

  An official who decides eligible online bankruptcy applications made by individuals in England and Wales.

• Bankruptcy application

  A formal request for bankruptcy. In England and Wales, an individual normally applies online, while creditor-led bankruptcy follows a court process.

• Bankruptcy debt

  A debt that falls within a bankruptcy and is dealt with under the rules of the bankruptcy estate, subject to statutory exceptions.

• Bankruptcy estate

  The pool of assets and rights that pass to or are controlled by the trustee for the purposes of administering a bankruptcy.

• Bankruptcy order

  The formal order that places a person into bankruptcy and triggers the legal consequences of the process.

• Bankruptcy petition

  A court application asking for a bankruptcy order to be made, commonly brought by a creditor where the legal conditions are met.

• Bankruptcy register

  A public or official record containing information about bankruptcy cases. The relevant register depends on the UK jurisdiction.

• Bankruptcy restrictions

  Legal limits that apply while someone is bankrupt, including restrictions on certain borrowing, business activities and company directorships.

• Bankruptcy Restrictions Order (BRO)

  A court order in England and Wales that extends bankruptcy restrictions where serious misconduct is established, potentially for several years.

• Bankruptcy Restrictions Undertaking (BRU)

  An agreement by a bankrupt person in England and Wales to accept extended bankruptcy restrictions without the court making a BRO.

• Bankruptcy trustee

  The person responsible for administering a bankrupt person’s estate, realising assets where appropriate and distributing available funds to creditors.

• Beneficial interest

  The financial value a person has in an asset even if the legal title is held jointly or in another name. It is particularly important with property.

• Bona vacantia

  Property that legally passes to the Crown when it has no owner, which can include certain assets left behind when a company is dissolved.

• Borrower

  The person or business that receives money or credit from a lender and is responsible for repayment under the agreement.

• Bounce Back Loan (BBL)

  A loan advanced under the UK Government’s Bounce Back Loan Scheme during the COVID-19 pandemic, with a government-backed guarantee to the lender.

• Bounce Back Loan Scheme (BBLS)

  The COVID-era government-backed lending scheme that enabled eligible small businesses to borrow through accredited lenders.

• Breach of covenant

  A failure to comply with a promise or condition in a loan, lease or other agreement, which may give the other party enforcement rights.

• Breach of fiduciary duty

  A failure by someone in a position of trust, such as a director, to comply with duties owed to the company or others under the law.

• Break clause

  A lease term allowing the landlord, tenant or both to end the lease early if specified conditions and notice requirements are met.

• Breathing Space

  A statutory debt respite scheme in England and Wales that can temporarily pause certain creditor action, interest and charges for eligible debts.

• Bridging finance

  Short-term finance usually secured against property and intended to be repaid from a sale, refinance or other defined exit. Costs can rise quickly if the exit is delayed.

• Business-purpose requirement

  A condition requiring borrowed funds to be used for legitimate business purposes rather than personal or prohibited uses.

• Business debt

  Money owed by a business to lenders, suppliers, HMRC, landlords or other creditors.

• Business finance

  Funding used for business purposes, including loans, overdrafts, asset finance, invoice finance and other commercial facilities.

• Business insolvency

  A situation where a business cannot pay debts when due or, for a company, where its liabilities exceed its assets under the relevant legal test.

• Business loan

  Money lent for business purposes under agreed repayment, interest, security and other terms.

• Business overdraft

  A bank facility allowing a business account to go below zero up to an agreed limit, normally repayable on demand or under the facility terms.

• Business rescue

  A strategy aimed at preserving a viable business, its operations or value while dealing with unsustainable debt or financial pressure.

• Buy-to-let mortgage (BTL)

  A mortgage used to finance property that is intended to be rented to tenants rather than occupied as the borrower’s main home.

C

• Capital repayment

  A payment that reduces the amount originally borrowed, as distinct from a payment that only covers interest or charges.

• Capped guarantee

  A guarantee that limits the guarantor’s maximum liability to an agreed amount or defined category of sums.

• Cash-flow insolvency

  A position where a company cannot pay debts as they fall due, even if it may own assets with significant value.

• Cash flow

  Money moving into and out of a business or household. Strong profit on paper does not always mean there is enough cash to pay bills when they fall due.

• CBILS loan

  A loan made under the Coronavirus Business Interruption Loan Scheme, with a government-backed guarantee to the lender but repayment obligations remaining with the borrower.

• Certificate of service

  A formal statement confirming when, where and how a legal document was served on another party.

• Charge for payment

  A Scottish formal demand for payment served after a court decree or certain other enforceable documents, often preceding further diligence.

• Charge holder

  A lender or other creditor that holds a legal charge over an asset as security for money owed.

• Charge on property

  A legal security interest registered against property, giving the creditor rights over the property if the secured obligation is not met.

• Charging order

  A court order in England and Wales that secures a judgment debt against property or certain other assets owned by the debtor.

• Claim

  A formal assertion that money, compensation or another remedy is owed. In court proceedings, it is the case brought by the claimant.

• Claimant

  The person or organisation bringing a civil court claim against another party.

• Cleared funds

  Money that has completed the banking process and is available for use, rather than a payment that is still pending or may be reversed.

• Client account

  A separate bank account used by a regulated or professional firm to hold client money apart from the firm’s own funds, where applicable.

• Co-borrower

  A person who borrows jointly with another and is usually responsible for the debt under the terms of the agreement.

• Co-director

  Another director of the same company. Liability is not automatically shared equally; it depends on the obligation, conduct and documents involved.

• Co-guarantor

  One of two or more people who have guaranteed the same debt. The guarantee wording determines how responsibility is divided or enforced.

• Co-signatory

  A person who signs an agreement alongside another party and may take on obligations depending on the document they sign.

• Collateral

  An asset offered as security for a debt. If the borrower defaults, the lender may have rights to enforce against that asset.

• Commercial debt

  Debt arising from business or commercial activity rather than ordinary personal consumer borrowing.

• Commercial finance

  A broad term for funding provided to businesses, including loans, overdrafts, asset finance, property finance and invoice finance.

• Commercial lease

  A contract giving a business the right to occupy premises for an agreed term, rent and set of conditions.

• Commercial lender

  A bank, finance company, fund or other organisation that provides credit primarily for business or investment purposes.

• Commercial mortgage

  A loan secured against commercial property, such as offices, shops, industrial units or investment premises.

• Commercial property

  Property used mainly for business or investment purposes rather than as a private home.

• Commercial Rent Arrears Recovery (CRAR)

  A statutory procedure in England and Wales that can allow a commercial landlord to recover qualifying rent arrears from a tenant’s goods without first obtaining a court judgment.

• Companies Act 2006

  The main UK statute governing companies, including directors’ duties, accounts, distributions and many aspects of company administration.

• Companies House

  The UK registrar of companies, responsible for incorporating companies and maintaining the public company register.

• Company Directors Disqualification Act 1986

  UK legislation that allows directors to be disqualified from acting in company management in specified circumstances, including certain misconduct linked to insolvency.

• Company Voluntary Arrangement (CVA)

  A formal agreement between a company and its creditors to repay or compromise debts over time while the company may continue trading.

• Compensation order

  An order requiring a disqualified director, in qualifying cases, to pay compensation where their conduct caused identifiable loss to creditors.

• Compliance

  Following the legal, regulatory, contractual or procedural rules that apply to a person, business or transaction.

• Compromise

  An agreement in which parties settle a dispute or debt on terms that may involve accepting less than the full amount claimed.

• Compulsory liquidation

  Court-ordered liquidation of a company, usually following a winding-up petition presented by a creditor or another authorised party.

• Construction Industry Scheme (CIS)

  An HMRC scheme requiring certain contractors in construction to deduct tax from payments to subcontractors and report those deductions.

• Consumer-credit legislation

  The body of laws and regulations governing credit provided to consumers, including disclosure, conduct and enforcement requirements.

• Consumer credit

  Credit provided to individuals for personal purposes and regulated, where applicable, by consumer credit law.

• Consumer Credit Act 1974

  Key UK legislation regulating many forms of consumer credit and setting requirements around agreements, notices and enforcement.

• Consumer debt

  Money owed by an individual on personal borrowing or household commitments, such as credit cards, loans and overdrafts.

• Contingent debt

  A potential liability that becomes payable only if a future event occurs, such as a guarantee being called in.

• Continuing guarantee

  A guarantee designed to cover an ongoing or changing balance, rather than one fixed transaction, subject to its wording.

• Contractual interest

  Interest charged because an agreement expressly allows it, at the rate and on the basis set out in that contract.

• Controlled Goods Agreement

  An agreement made during enforcement in England and Wales listing goods under the enforcement agent’s control while allowing them to remain with the debtor subject to payment terms.

• Coronavirus Business Interruption Loan Scheme (CBILS)

  A UK Government COVID-era scheme that supported lending to eligible businesses through accredited lenders, with a government guarantee protecting part of the lender’s exposure.

• Corporate guarantee

  A guarantee given by one company for the debts or obligations of another person or company.

• Corporate insolvency

  Financial distress or formal insolvency affecting a company, including circumstances that may lead to administration, liquidation, a CVA or another restructuring process.

• Corporate Insolvency and Governance Act 2020

  UK legislation that introduced and changed corporate restructuring and insolvency tools, including the standalone moratorium and restructuring plan framework.

• Corporate liability

  A debt or legal obligation owed by a company in its own name, rather than automatically by its directors or shareholders personally.

• Corporate moratorium

  A statutory breathing-space procedure for eligible companies that can restrict certain creditor action while the company explores rescue or restructuring options.

• Corporate veil

  The legal separation between a company and the individuals behind it. It usually protects directors and shareholders from company debts unless a separate basis for personal liability exists.

• Corporation Tax

  Tax charged on the taxable profits of companies and certain organisations in the UK.

• Costs

  Expenses incurred in a legal, insolvency, enforcement or professional process. Depending on the rules, some costs may be added to the amount owed.

• County Court

  The civil court in England and Wales that deals with many money claims, debt disputes and enforcement applications.

• County Court Judgment (CCJ)

  A judgment made by the County Court requiring someone to pay money. It can affect credit records and may be enforced if unpaid.

• Court claim

  Formal civil proceedings started in court to obtain payment, a judgment or another legal remedy.

• Court decree

  The Scottish term commonly used for a court judgment or order, including an order that money is owed.

• Court order

  A legally binding direction made by a court requiring a person or organisation to do, or stop doing, something.

• Court restoration

  A court process used to restore a dissolved company to the register where the statutory conditions are met.

• Covenant

  A binding promise in a contract, loan or lease. Breaching a covenant can trigger remedies or enforcement rights.

• Credit

  Money, goods or services provided now with payment due later, usually under agreed terms.

• Credit agreement

  A contract setting out the terms on which credit is provided, including repayment, interest, charges and any security.

• Credit Director’s Loan Account

  A director’s loan account showing that the company owes money to the director, rather than the director owing money to the company.

• Credit facility

  An agreed source of borrowing that can be drawn subject to set limits and conditions, such as an overdraft or revolving loan.

• Credit file

  The record held by a credit reference agency containing information used by lenders and others to assess creditworthiness.

• Credit limit

  The maximum amount a lender agrees a borrower may owe under a credit facility at a particular time.

• Creditor

  A person, business, lender or public body to whom money is owed.

• Creditor action

  Steps taken by a creditor to recover or protect a debt, ranging from demands and negotiation to court or insolvency proceedings.

• Creditor claim

  A creditor’s stated right to be paid, particularly in litigation or an insolvency process where the amount may need to be proved.

• Creditor negotiations

  Discussions with creditors aimed at changing repayment terms, agreeing time to pay or reaching a settlement.

• Creditor proposal

  An offer or set of terms put forward by or to a creditor to resolve a debt, usually involving payment amount, timing or security.

• Creditors’ Voluntary Liquidation (CVL)

  A liquidation started by an insolvent company’s shareholders, with creditors having an important role in the appointment and oversight of the liquidator.

• Creditor’s petition

  A petition presented by a creditor asking a court to make an insolvency order, such as a bankruptcy or winding-up order where the legal tests are met.

• Credit rating

  A broad assessment of credit risk. For individuals the more common measures are a credit report and credit score; companies may also receive formal ratings.

• Credit Reference Agency (CRA)

  An organisation that collects and supplies credit information to lenders and other authorised users.

• Credit report

  A record of borrowing, repayment history, public information and other data used to help assess creditworthiness.

• Credit score

  A numerical indicator used by a credit reference agency or lender to help assess the likelihood of repayment. Different organisations can produce different scores.

• Credit search

  A check of credit information carried out by a lender, business or individual for an authorised purpose.

• Creditworthiness

  An assessment of how likely a borrower is to meet financial obligations, based on factors such as income, assets, debts and payment history.

• Cross-default

  A clause allowing a default under one agreement to trigger a default under another related agreement.

• Crown preference

  Rules giving certain debts owed to HMRC preferential status in insolvency, meaning they rank ahead of ordinary unsecured creditors for relevant distributions.

• Crystallisation of a floating charge

  The point when a floating charge stops floating over changing assets and attaches more firmly to assets covered by the security, usually following a specified event.

• Crystallised amount

  The amount of a previously contingent, variable or unquantified liability once it has become fixed and payable.

• Crystallised liability

  A liability that has moved from potential or contingent to an actual, enforceable amount owed.

• Custody Warrant

  A Northern Ireland enforcement measure that can be issued through the Enforcement of Judgments Office in specified circumstances for non-compliance with enforcement requirements.

• CVA proposal

  The formal document setting out how a company proposes to compromise or repay debts under a Company Voluntary Arrangement.

D

• DAS Register

  The Scottish public register containing information about the Debt Arrangement Scheme, including Debt Payment Programmes and relevant moratoria.

• Debenture

  A document creating security for a company’s borrowing, often including fixed and floating charges over business assets.

• Debit balance

  An account balance showing money is owed from that account. In a director’s loan account, it commonly means the director owes money to the company.

• Debt

  Money or another financial obligation owed by one person or organisation to another.

• Debt adjusting

  A regulated activity involving negotiating with creditors on behalf of a debtor about the terms on which debts will be repaid or settled.

• Debt advice

  Information and guidance designed to help someone understand their debts, risks and available options before deciding what to do.

• Debt Arrangement Scheme (DAS)

  A Scottish statutory debt management scheme that allows eligible debtors to repay debts through an approved Debt Payment Programme with certain protections from enforcement.

• Debt buyer

  A company that purchases debts from the original creditor and then seeks to collect or settle them in its own right.

• Debt collection agency

  A business instructed to collect overdue debts on behalf of a creditor, or sometimes collecting debts it has purchased.

• Debt counselling

  A regulated activity involving advice to a debtor about how to deal with debts and available debt solutions.

• Debt forgiveness

  A creditor’s agreement to release a debtor from paying some or all of a debt.

• Debt Management Plan (DMP)

  An informal repayment arrangement under which a person makes affordable payments towards unsecured debts, usually through a debt management provider or adviser.

• Debt negotiation

  The process of negotiating directly with creditors to seek a more manageable repayment arrangement, settlement or other commercial resolution.

• Debt Negotiation Services (DNS)

  A term used for services focused on negotiating with creditors to reduce, settle or restructure debts on a client’s behalf.

• Debtor

  A person or organisation that owes money to another party.

• Debtor finance

  Funding linked to money owed by customers, commonly provided through invoice finance, factoring or invoice discounting.

• Debtor’s petition

  A formal application made by a debtor asking the court for their own bankruptcy under procedures where that terminology applies.

• Debt Payment Programme (DPP)

  The repayment plan used within Scotland’s Debt Arrangement Scheme, setting out how participating debts will be paid over time.

• Debt purchaser

  A person or business that buys the legal rights to a debt and may then collect, negotiate or enforce it.

• Debt recovery

  The process of pursuing payment of money that is overdue, from initial contact through to legal enforcement where necessary.

• Debt reduction

  A decrease in the amount a debtor ultimately has to repay, usually through negotiation, settlement, write-off or a formal debt process.

• Debt relief

  A broad term for measures that reduce, restructure or legally discharge debts a person cannot reasonably repay in full.

• Debt Relief Order (DRO)

  A formal personal insolvency solution in England and Wales for eligible people with low income, limited assets and qualifying debts.

• Debt Relief Restrictions Order (DRRO)

  An order that can extend certain restrictions after a Debt Relief Order where misconduct is found.

• Debt Relief Restrictions Undertaking (DRRU)

  An undertaking by a person subject to a Debt Relief Order to accept extended restrictions without the court making a DRRO.

• Debt resolution

  A planned process for bringing debts under control through negotiation, restructuring, settlement or a suitable formal solution.

• Debt Respite Scheme

  The legal framework behind Breathing Space in England and Wales, providing eligible debtors temporary protection from certain creditor action.

• Debt settlement

  An agreement under which a creditor accepts an agreed payment or series of payments in resolution of a debt, often for less than the full balance.

• Debt strategist

  An adviser who looks at the whole financial position and builds a tailored plan to manage creditor pressure, reduce exposure and protect what matters to the client.

• Debt strategy

  A structured plan for dealing with debts based on the legal position, creditor behaviour, available assets, affordability and the client’s priorities.

• Debt write-off

  The cancellation of some or all of a debt so the debtor is no longer required to pay the written-off amount.

• Decree

  A Scottish court judgment or order. A decree for payment can provide the basis for formal debt enforcement.

• Deed

  A legal document executed with specific formalities. Guarantees, releases and property arrangements may sometimes be documented as deeds.

• Default

  Failure to meet an obligation under an agreement, such as missing a required payment or breaching another key term.

• Default charges

  Fees or costs applied because an agreement has been breached, subject to the contract and any applicable legal or regulatory limits.

• Default interest

  A higher or additional rate of interest that may become payable after a default, where the agreement lawfully allows it.

• Default notice

  A formal notice required in certain regulated credit agreements before a creditor can take specified enforcement steps.

• Defendant

  The person or organisation against whom a civil court claim is brought.

• Deficiency

  A shortfall between what is owed and what available assets or funds can cover, often shown in insolvency accounts or statements.

• Defrauding creditors

  Dishonestly putting assets beyond creditors’ reach or otherwise prejudicing them. This can have serious civil and criminal consequences.

• Demand for payment

  A request, usually in writing, requiring a debt to be paid by a stated date. Some demands have specific legal significance.

• Development finance

  Funding for property development projects, commonly secured on the site and repaid from sale or refinancing when the project completes.

• Dilapidations

  A commercial property claim for repairs, reinstatement or other lease obligations that a tenant may owe at or near the end of a lease.

• Diligence

  The Scottish term for formal methods of enforcing debts after the necessary legal authority has been obtained.

• Director

  A person legally responsible for managing a company. Directors have statutory and fiduciary duties that can become especially important when a company is in financial distress.

• Director conduct

  The way a director has managed a company and met their legal duties. It may be reviewed closely if the company becomes insolvent.

• Director disqualification

  A legal restriction preventing someone from acting as a company director or taking part in company management for a set period.

• Director investigation

  A review of a director’s decisions, transactions and conduct, often carried out after a company enters formal insolvency.

• Director liability for government-backed lending

  Directors may face personal liability for misuse, misrepresentation or other misconduct involving government-backed business loans. The loan itself does not normally make a director personally liable.

• Director misconduct

  Conduct by a director that breaches legal duties or falls below required standards, potentially leading to claims, disqualification or other consequences.

• Director remuneration

  Pay and benefits received by a director for their work, including salary, fees, bonuses or other approved payments.

• Directors’ Loan Account

  An accounting record showing money moving between a company and one or more directors outside normal salary, expenses or dividends.

• Director’s Loan Account (DLA)

  An account recording money a director owes to the company or the company owes to the director.

• Discharged bankrupt

  A person whose bankruptcy discharge has taken effect, ending most bankruptcy restrictions but not necessarily every obligation connected with the case.

• Discharge from bankruptcy

  The point at which most bankruptcy restrictions end and the bankrupt is released from most debts covered by the bankruptcy, subject to exceptions.

• Disposable income

  Income left after reasonable essential living costs and priority commitments have been paid.

• Disqualification order

  A court order preventing a person from acting as a company director or taking part in company management for a specified period.

• Disqualification undertaking

  A formal agreement to accept director disqualification without the court making a disqualification order.

• Dissolution

  The legal removal of a company from the Companies House register, after which the company ceases to exist.

• Distraint

  An older term for taking goods to recover unpaid debts or taxes. Modern procedures now use different terminology, such as Taking Control of Goods.

• Distributable reserves

  Profits legally available for a company to pay dividends. Paying dividends without sufficient distributable reserves can create repayment and director-liability issues.

• Distribution

  A payment made from available funds in an insolvency process to creditors or other entitled parties according to the legal order of priority.

• Dividend

  A payment made by a company to shareholders from profits lawfully available for distribution.

• Dividend to creditors

  A payment made to creditors from funds available in an insolvency process, usually expressed as a percentage or pence in the pound of their admitted claims.

• Dormant company

  A company that has had no significant accounting transactions during the relevant period, subject to the statutory definition.

• Drawings

  Money taken from a business by an owner for personal use. For sole traders and partnerships, drawings are different from salary or dividends.

• DRO moratorium

  The period during a Debt Relief Order when qualifying creditors are generally restricted from taking enforcement action without permission.

• Duty to creditors

  The principle that directors must give increasing weight to creditors’ interests when insolvency is probable or the company is insolvent.

E

• Earnings arrestment

  A Scottish enforcement measure requiring an employer to deduct money from a debtor’s wages and pay it towards a debt.

• Electronic signature

  A method of signing a document electronically. Whether it creates an enforceable agreement depends on the document, process and legal requirements involved.

• Enforceability

  Whether a legal right, debt, guarantee or agreement can actually be enforced through the courts or another lawful process.

• Enforceable

  Capable of being legally upheld or pursued through an appropriate enforcement process.

• Enforceable debt

  A debt that a creditor is legally entitled to pursue and enforce, subject to any procedural requirements.

• Enforcement

  The use of legal or contractual rights to compel payment, recover assets or make a debtor comply with an obligation.

• Enforcement action

  A specific step taken to recover a debt, such as instructing enforcement agents, obtaining a charging order or pursuing insolvency proceedings.

• Enforcement agent

  An authorised person who enforces certain court judgments and debts, including by taking control of goods where the law permits.

• Enforcement of a personal guarantee

  Steps taken by a lender or creditor to recover money from a guarantor after the guaranteed obligation has become payable.

• Enforcement of Judgments Office (EJO)

  The Northern Ireland body responsible for enforcing many civil court judgments and orders.

• Enforcement Order

  An order authorising or directing a particular method of enforcing a judgment or debt. The precise form depends on the jurisdiction and procedure.

• Enrolled debt

  A debt formally included within a repayment, settlement or debt-management arrangement for administration under that process.

• Equity

  The value left in an asset after deducting secured borrowing or other charges against it. With property, it is broadly the property value minus secured mortgage debt.

• Estimated outcome statement

  A document estimating what creditors may receive under different insolvency or restructuring options, helping stakeholders compare likely outcomes.

• Event of default

  An event defined in a finance agreement that gives the lender additional rights, such as demanding repayment or enforcing security.

• Excluded assets

  Assets that do not form part of an insolvency estate because legislation specifically protects or excludes them.

F

• Facility agreement

  The contract setting out the terms of a lending facility, including borrowing limits, interest, repayment, covenants, security and default provisions.

• Factoring

  A form of invoice finance where a finance provider advances money against invoices and normally also manages collection from customers.

• FCA authorisation

  Permission from the Financial Conduct Authority to carry on specified regulated financial activities in the UK.

• Fiduciary duty

  A duty to act loyally and properly in another party’s interests, such as duties owed by company directors to the company.

• Final charging order

  A court order that confirms a judgment debt is secured against specified property or assets after the interim stage.

• Final dividend

  A dividend approved after the financial year, usually by shareholders following a recommendation from the directors.

• Finance lease

  A lease that gives a business use of an asset for most of its economic life while the finance provider retains legal ownership.

• Financial association

  A link recorded on a credit file between people who share certain joint financial products, which can affect how lenders assess applications.

• Financial Conduct Authority (FCA)

  The UK regulator responsible for conduct in financial services and for authorising and supervising many firms that provide credit and debt-related services.

• Financial distress

  A position where debts, cash flow or financial commitments are becoming difficult to manage and action may be needed before the position worsens.

• Financial obligations

  Amounts a person or business is required to pay, whether under loans, contracts, taxes, guarantees or other legal commitments.

• Financial statement

  A summary of income, spending, assets, liabilities and sometimes cash flow, used to understand what can realistically be paid.

• First charge

  The security interest with first priority over an asset, usually meaning it is paid before lower-ranking charges if the asset is sold.

• Fixed charge

  Security over a specific asset that generally restricts the company’s ability to dispose of that asset without the lender’s consent.

• Fixed charge receiver

  A receiver appointed by a lender under a fixed charge, often over property, to take control of and realise the secured asset.

• Floating charge

  Security over a changing class of company assets, such as stock or receivables, allowing the company to deal with them in the ordinary course of business until the charge crystallises.

• Forbearance

  A lender’s decision to give temporary flexibility, such as reduced payments, extra time or a pause in enforcement, rather than immediately exercising its rights.

• Forced sale

  A sale of an asset brought about by legal or creditor enforcement rather than by the owner’s ordinary choice.

• Forfeiture

  The ending of a lease by a landlord following a qualifying breach, subject to the lease terms and legal protections available to the tenant.

• Forged signature

  A signature made or copied without the genuine signer’s authority. A genuine dispute over forgery can be highly relevant to whether an agreement is enforceable.

• Formal debt solution

  A legally recognised procedure for dealing with debt, such as bankruptcy, an IVA, a DRO or another statutory process.

• Formal insolvency

  A statutory insolvency procedure, such as liquidation, administration, bankruptcy or another legally defined insolvency process.

• Former director

  A person who previously served as a company director. Resigning does not automatically remove liability for obligations or conduct arising during their time in office.

• Fraud

  Intentional deception intended to secure an unlawful gain or cause another person loss. Allegations of fraud require careful legal assessment.

• Fraudulent misrepresentation

  A false statement made knowingly, without belief in its truth or recklessly, which induces another party to enter into a transaction.

• Fraudulent trading

  Carrying on a company’s business with intent to defraud creditors or for another fraudulent purpose. It can lead to serious civil and criminal consequences.

• Full and final settlement

  An agreement where a creditor accepts an agreed payment in complete settlement of the debt and gives up the right to pursue the remaining balance, subject to the wording agreed.

G

• Garnishee Order

  A Northern Ireland enforcement order that can require money held by a third party, commonly a bank, to be paid towards a judgment debt.

• Going-concern sale

  The sale of a business while it is still operating, often preserving more value, jobs and customer relationships than a break-up sale.

• Going concern

  A business expected to continue operating for the foreseeable future rather than being wound up or forced to stop trading.

• Government-backed loan

  A loan made by a lender under a government-supported scheme where the state guarantees part of the lender’s exposure.

• Government guarantee

  A commitment by government to cover an agreed part of a lender’s loss under a qualifying scheme. It does not normally remove the borrower’s repayment obligation.

• Guarantee agreement

  A contract under which a guarantor agrees to meet another party’s obligations if that party does not do so.

• Guarantee liability

  The amount or obligation a guarantor may have to pay under the wording of a valid and enforceable guarantee.

• Guarantor

  A person or company that promises to meet another party’s debt or obligation if the primary debtor fails to do so.

H

• Hard search

  A credit check usually carried out when someone applies for borrowing. It is recorded on the credit file and can be visible to other lenders.

• High Court Enforcement Officer (HCEO)

  An authorised enforcement officer who enforces qualifying High Court judgments and certain transferred County Court judgments in England and Wales.

• Hire purchase (HP)

  An agreement allowing a customer to use an asset while paying instalments, with ownership normally transferring only after all required payments and conditions are met.

• HM Courts & Tribunals Service (HMCTS)

  The government agency responsible for administering courts and tribunals in England and Wales.

• HMRC business debt

  Tax or other amounts owed by a business to HMRC, such as VAT, PAYE, CIS deductions or Corporation Tax.

• HMRC debt

  Money owed to HMRC by an individual or business, including unpaid tax, interest and penalties where applicable.

• HMRC enforcement

  Steps HMRC can take to recover unpaid tax, ranging from contact and payment arrangements to legal, insolvency or asset-enforcement action.

• HM Revenue & Customs (HMRC)

  The UK tax authority responsible for collecting taxes including VAT, PAYE, Corporation Tax and Self Assessment liabilities.

I

• Illegal dividend

  Common shorthand for a dividend paid when the legal requirements for a lawful distribution were not met. The more precise term is usually unlawful dividend.

• Income and expenditure

  A breakdown of money coming in and essential spending going out, used to assess affordability and realistic repayment capacity.

• Income contributions

  Payments made from surplus income into an insolvency or debt arrangement where the rules require or permit them.

• Income Payments Agreement (IPA)

  A binding agreement in an England and Wales bankruptcy requiring the bankrupt to pay affordable surplus income into the bankruptcy estate, normally for a limited period.

• Income Payments Order (IPO)

  A court order in an England and Wales bankruptcy requiring payments from surplus income into the bankruptcy estate where an agreement has not been reached.

• Income Tax

  Tax charged on taxable income received by individuals and certain other taxpayers in the UK.

• Indemnity

  A promise to compensate another party for specified loss or liability. In finance documents it can create obligations separate from a guarantee.

• Independent legal advice

  Advice from a lawyer acting only for the person receiving the advice, without a conflict of interest. It is often relevant when significant guarantees or security are being signed.

• Individual Insolvency Register

  The public register in England and Wales containing details of current and recent individual insolvency cases, including bankruptcies, IVAs and DROs.

• Individual Voluntary Arrangement (IVA)

  A formal agreement in England and Wales between an individual and creditors to repay or settle debts on approved terms, supervised by an insolvency practitioner.

• Informal debt solution

  A non-statutory way of dealing with debt, such as direct negotiation, a repayment arrangement or a negotiated settlement.

• Informal repayment arrangement

  A repayment agreement made directly with a creditor outside a formal insolvency procedure.

• Inhibition

  A Scottish form of diligence that can restrict a debtor from selling or otherwise dealing with land or property to the prejudice of the creditor.

• Insolvency

  A financial state in which a person or business cannot meet debts as required, or a company meets another statutory insolvency test. It is not the same thing as liquidation.

• Insolvency Act 1986

  The principal legislation governing many company and personal insolvency procedures in England, Wales and, in parts, Scotland.

• Insolvency estate

  The assets, rights and funds controlled by an insolvency office-holder for the purpose of dealing with claims and making distributions.

• Insolvency legislation

  The laws and regulations governing what happens when individuals or businesses cannot meet their debts and enter formal insolvency procedures.

• Insolvency practitioner

  A person licensed to act in formal insolvency appointments such as liquidator, administrator, trustee in bankruptcy or IVA supervisor.

• Insolvency proceedings

  Formal legal processes connected with insolvency, including bankruptcy, liquidation, administration and other statutory procedures.

• Insolvency register

  An official register containing information about insolvency cases. The relevant register differs across the UK jurisdictions.

• Insolvency Rules

  Detailed procedural rules that sit alongside insolvency legislation and govern how formal insolvency cases are administered.

• Insolvency scrutiny

  Close examination of transactions, accounts and director conduct when a company or individual enters insolvency.

• Insolvency Service

  The government agency responsible for areas including company investigations, bankruptcy administration, director disqualification and oversight of the insolvency framework in Great Britain.

• Insolvency set-off

  Rules that automatically balance certain mutual debts between an insolvent party and a creditor so only the net amount is claimed or paid.

• Insolvent

  Unable to meet debts under the relevant legal test. For a company, this may involve cash-flow or balance-sheet insolvency.

• Insolvent trading

  A broad expression for continuing to trade while financially insolvent. The legal consequences depend on the director’s conduct and the specific statutory rules involved.

• Instalment

  One of a series of scheduled payments made towards a debt, purchase or financial obligation.

• Instalment Order

  A Northern Ireland enforcement order requiring a judgment debtor to make fixed regular payments towards the debt.

• Interest

  The cost of borrowing money, usually calculated as a percentage of the amount outstanding over time.

• Interest-free

  A period or agreement where no interest is charged, though other fees, terms or repayment obligations may still apply.

• Interest-only mortgage

  A mortgage where regular payments usually cover interest only, leaving the original capital to be repaid separately at the end of the term.

• Interest-only repayment period

  A temporary period when scheduled payments cover interest rather than reducing the underlying capital balance.

• Interim Bankruptcy Restrictions Order (IBRO)

  A temporary court order in England and Wales extending bankruptcy restrictions while an application for a full Bankruptcy Restrictions Order is being decided.

• Interim charging order

  The first stage of a charging-order application in England and Wales, temporarily securing a judgment debt pending the court’s final decision.

• Interim dividend

  A dividend declared and paid by directors during the financial year before the final annual results are approved.

• Invoice discounting

  A form of invoice finance where a business borrows against unpaid invoices but normally keeps control of customer collections.

• Invoice finance

  Funding advanced against unpaid customer invoices to improve cash flow before those invoices are paid.

• Invoice financing

  Another term for invoice finance: borrowing or receiving an advance against outstanding customer invoices.

• Irish vulture fund

  An informal term commonly used in Ireland for investment funds that buy distressed loans or debt portfolios, often at a discount, and then manage or enforce them.

• IVA failure

  The ending of an IVA because its terms have not been met or it can no longer continue. Creditors may then regain rights to pursue the remaining debts.

• IVA nominee

  The insolvency practitioner who reviews and puts forward an IVA proposal before it is approved, assessing whether it has a reasonable prospect of being implemented.

• IVA proposal

  The formal terms offered to creditors in an IVA, setting out payments, assets, contributions and how creditors would be treated.

• IVA Protocol

  A standard framework for straightforward consumer IVAs in England and Wales, setting expectations for how qualifying cases should be proposed and supervised.

• IVA supervisor

  The insolvency practitioner responsible for overseeing an approved IVA and ensuring its terms are followed.

• IVA termination

  The formal ending of an IVA, whether because it has completed, failed or been brought to an end under its terms.

• IVA variation

  An agreed change to the terms of an existing IVA, usually requiring creditor approval where the proposal or rules require it.

J

• Joint and several liability

  A form of liability where each liable person can be pursued for the whole amount, leaving those parties to sort out contributions between themselves.

• Joint liability

  An obligation shared by two or more people or organisations. The agreement and law determine whether each party can be pursued for all or only part of the debt.

• Judgment

  A court’s formal decision in a case, including a decision that one party owes money to another.

• Judgment creditor

  A creditor who has obtained a court judgment confirming that money is owed to them.

• Judgment debt

  Money payable under a court judgment, which may be enforced if it remains unpaid.

• Judgment debtor

  The person or organisation ordered by a court judgment to pay money.

• Judgment in default

  A judgment entered because a defendant failed to respond to a court claim within the required time.

L

• Landlord

  The person or organisation that owns or controls property and grants a tenant the right to occupy it under a lease or tenancy.

• Landlord enforcement

  Steps a landlord may lawfully take to recover rent, enforce lease terms or regain possession, depending on the type of property and agreement.

• Late-filing penalty

  A financial penalty charged when a required return, account or document is filed after the deadline.

• Late-payment interest

  Interest charged because a payment was not made by the due date.

• Late-payment penalty

  A penalty imposed when tax or another regulated payment is made after the required deadline.

• Late payment

  A payment made after the contractual, statutory or agreed due date.

• Law of Property Act receiver / LPA receiver

  A receiver appointed under property security powers, commonly by a mortgage lender, to take control of and realise income or property securing a debt.

• Lease

  A legal agreement giving a tenant the right to use property or an asset for a defined period on agreed terms.

• Lease guarantee

  A guarantee supporting a tenant’s obligations under a lease, potentially making the guarantor liable if the tenant defaults.

• Lease liability

  An amount or obligation arising under a lease, such as unpaid rent, service charges, dilapidations or guaranteed lease commitments.

• Lease surrender

  An agreement between landlord and tenant to bring a lease to an end before its contractual expiry date.

• Legal charge

  A form of security over property that gives a lender enforceable rights if the secured debt is not paid.

• Legal costs

  Fees and expenses connected with legal advice, court proceedings or enforcement. Responsibility for them depends on the agreement, court rules and outcome.

• Legal entity

  A person or organisation recognised by law as having its own rights and obligations, such as a limited company.

• Legal proceedings

  Formal action brought through a court or tribunal to resolve a dispute or enforce a legal right.

• Lender

  A person or organisation that provides money or credit on terms requiring repayment.

• Letter before action

  A formal warning that court proceedings may be started if a dispute or debt is not resolved by a stated deadline.

• Letter before claim

  A pre-court letter setting out a proposed claim and giving the recipient an opportunity to respond before proceedings begin.

• Letter of authority

  A signed document allowing an adviser or representative to communicate with creditors or other organisations on the client’s behalf.

• Liabilities

  Amounts a person or business owes or may be required to pay, including loans, taxes, trade debts, guarantees and other obligations.

• Liability

  A legal or financial obligation to pay money, compensate another party or meet another duty.

• Liability cap

  A contractual limit on the maximum amount a party can be required to pay under a particular obligation, such as a guarantee.

• Liable

  Legally responsible for paying a debt or meeting an obligation.

• Licensed insolvency practitioner

  An insolvency practitioner authorised by a recognised professional body or other competent authority to accept formal insolvency appointments.

• Lien

  A legal right to retain possession of property until a debt or obligation connected with it has been satisfied.

• Lifting the corporate veil

  An exceptional legal concept where the normal separation between a company and individuals behind it is disregarded for a specific legal purpose.

• Limitation Act 1980

  The main legislation setting time limits for many civil claims in England and Wales, including certain debt claims.

• Limitation period

  The legal time limit within which a claim must usually be brought. The period depends on the type of debt, jurisdiction and what has happened since the debt arose.

• Limited-company buy-to-let

  A buy-to-let property investment owned and financed through a limited company rather than directly by an individual.

• Limited liability

  The principle that shareholders or members are generally not personally responsible for a company’s debts beyond their agreed investment, unless a separate basis for liability exists.

• Liquidate

  To place a company into liquidation or, more generally, convert assets into cash.

• Liquidation

  A formal process that closes a company, realises its assets and distributes available funds to creditors before the company is dissolved.

• Liquidator

  The insolvency practitioner responsible for conducting a liquidation, realising assets, investigating relevant conduct and distributing funds according to insolvency law.

• Liquidity

  The ability to meet short-term payments as they fall due, using cash or assets that can quickly be converted into cash.

• Litigation

  The process of resolving a dispute through court proceedings.

• Loan

  Money advanced by a lender that must be repaid under agreed terms, usually with interest or fees.

• Loan-to-value (LTV)

  The amount borrowed secured against a property expressed as a percentage of the property’s value.

• Loan agreement

  The contract setting out the terms of a loan, including amount, repayment, interest, security, covenants and default rights.

• Loan covenant

  A promise or financial condition in a loan agreement that the borrower must comply with during the life of the facility.

• Loan extension

  An agreed change that pushes the loan maturity or repayment period to a later date, often affecting total interest cost.

• Loan repayment holiday

  A temporary agreed pause in scheduled repayments. Interest may continue to accrue, so the total amount payable can still increase.

• Loan restructuring

  Changing the terms of a loan to make repayment more workable, for example by extending the term, changing instalments or revising security.

• Loan sale

  The transfer of a loan or debt from one lender or investor to another, which may also transfer associated rights and security.

• Loan term

  The period over which a loan is scheduled to remain outstanding before final repayment.

• Loan to participator

  A tax term for certain loans or advances made by a close company to shareholders or other participators, which can trigger specific tax consequences.

• Loss

  A financial shortfall where costs, liabilities or reductions in value exceed income or gains over a period or transaction.

• Lump-sum settlement

  A negotiated settlement where an agreed one-off payment is made to resolve a debt, often for less than the full amount claimed.

M

• Maturity date

  The date on which a loan or other financial obligation is due to be repaid in full unless it is refinanced or extended.

• Members’ Voluntary Liquidation (MVL)

  A solvent liquidation used to wind up a company that can pay its debts in full, usually as part of an orderly closure or distribution to shareholders.

• Mental Health Crisis Breathing Space

  A form of Breathing Space in England and Wales for eligible people receiving qualifying mental health crisis treatment, with protections lasting for the treatment period plus a further period.

• Merchant cash advance

  Business funding repaid by taking an agreed share of future card sales or revenue. It is structured differently from a conventional loan.

• Minimal Asset Process (MAP)

  A simplified Scottish bankruptcy route for eligible people with low income, limited assets and debts within the statutory criteria.

• Misapplication of company assets

  Improper use, transfer or handling of company money or property, which may give rise to recovery claims against those responsible.

• Misfeasance

  A breach of duty or misuse of company property by a director or other officer that can lead to a court order requiring repayment, restoration or compensation.

• Misrepresentation

  A false statement that induces another party to enter into a contract. The legal consequences depend on how and why the statement was made.

• Missed payment

  A scheduled payment that was not made by the due date.

• Misspending

  Informal wording for using borrowed or company funds for purposes that were not permitted, intended or properly authorised.

• Misuse of funds

  Using money for an unauthorised, improper or prohibited purpose, potentially creating contractual, tax, insolvency or legal consequences.

• Moratorium

  A temporary legal pause or restriction on certain creditor action while a debtor or company uses a qualifying statutory process.

• Moratorium on diligence

  A Scottish protection that temporarily restricts creditors from using certain diligence while a debtor considers or applies for specified debt solutions.

• Mortgage

  A loan secured against property, giving the lender rights over the property if the borrower does not meet the agreed obligations.

• Mortgage arrears

  Mortgage payments that have fallen due but remain unpaid.

• Mortgage debt

  Money owed under a mortgage, including the outstanding capital and any interest, fees or arrears due under the agreement.

• Mortgagee

  The lender or security holder under a mortgage.

• Mortgage lender

  The bank, building society, fund or other creditor that provides a mortgage and holds security over the property.

• Mortgage maturity

  The point at which the mortgage term ends and any remaining amount becomes due, unless another arrangement is agreed.

• Mortgage shortfall

  The amount still owed to a mortgage lender after a property has been sold and the sale proceeds are not enough to clear the secured debt and related costs.

• Mortgagor

  The borrower or property owner who grants a mortgage over property as security for a debt.

N

• National Insurance Contributions (NICs)

  Payments collected by HMRC from employers, employees and the self-employed under the National Insurance system.

• Negative equity

  A position where an asset, usually property, is worth less than the debt secured against it.

• Negotiated settlement

  A debt resolution agreed through negotiation, usually changing the amount, timing or method of payment from the creditor’s original demand.

• Net assets

  The value remaining after total liabilities are deducted from total assets.

• Net worth

  The value of everything a person or business owns after deducting what they owe. It is often central to realistic settlement discussions.

• Nominee

  An insolvency practitioner who assesses and puts forward a proposed IVA or CVA before it is approved, depending on the process involved.

• Non-compliance

  Failure to follow a legal, regulatory, contractual or procedural requirement.

• Non-formal debt solution

  Another term for an informal debt solution, meaning an arrangement reached outside a statutory insolvency process.

• Non-priority debt

  A debt where the immediate consequences of non-payment are generally less severe than for priority debts, though the creditor may still take recovery action.

• Northern Ireland Insolvency Service

  The public service responsible for administering and overseeing aspects of personal and corporate insolvency in Northern Ireland.

• Notice of default

  A notice telling a borrower that an obligation has been breached or payment has been missed. It may be contractual or required by law depending on the agreement.

• Notice of Intention to Enforce a Judgment

  A Northern Ireland notice informing a judgment debtor that enforcement through the Enforcement of Judgments Office is being pursued.

• Notice of Intention to Make an Order Charging Land

  A Northern Ireland notice warning that the Enforcement of Judgments Office intends to seek an order charging land owned by the debtor.

• Notice of sums in arrears

  A statutory notice required for certain regulated credit agreements when specified levels of arrears have arisen.

O

• Official Receiver

  A government official who deals with the early stages of many bankruptcies and compulsory liquidations and may act as trustee or liquidator unless another practitioner is appointed.

• Operating lease

  A lease allowing a business to use an asset for a period without usually taking on the risks and rewards associated with ownership for most of the asset’s life.

• Order Charging Land (OCL)

  A Northern Ireland enforcement order that secures a judgment debt against land or property so the debt can be addressed from future value or sale proceeds.

• Order for Delivery of Possession of Land

  A Northern Ireland enforcement order requiring possession of land or property to be given to the party entitled to it.

• Order for sale

  A court order allowing secured or judgment creditors, in qualifying circumstances, to force the sale of property to recover money owed.

• Order of Seizure

  A Northern Ireland enforcement order authorising seizure of certain goods or assets to satisfy a judgment debt.

• Outstanding balance

  The amount of a debt that remains unpaid at a given date, including any applicable interest or charges.

• Overdraft

  A credit facility allowing an account balance to fall below zero up to an agreed or authorised limit.

• Overdrawn Director’s Loan Account (ODLA)

  A director’s loan account showing that the director owes money to the company. It can become especially important if the company enters insolvency.

P

• Pari passu

  A Latin term meaning “on an equal footing”. In insolvency it describes creditors in the same class sharing available funds proportionately.

• Partial settlement

  An agreement where a creditor accepts a payment towards the debt but does not necessarily release the remaining balance unless the settlement terms expressly say so.

• Pay As You Earn (PAYE)

  The HMRC system under which employers deduct Income Tax and National Insurance from employees’ pay and pass it to HMRC.

• Pay As You Grow (PAYG)

  Repayment options introduced for Bounce Back Loans that allowed eligible borrowers to extend terms, take repayment holidays or move temporarily to interest-only payments.

• Payment arrangement

  An agreement with a creditor about how and when a debt will be repaid, often by affordable instalments.

• Payment plan

  A structured schedule for repaying a debt over time rather than paying the full amount immediately.

• Payment proposal

  An offer setting out how a debtor proposes to pay or settle a debt, including amount, timing and any conditions.

• Penalties

  Financial charges imposed for failing to meet legal, tax, regulatory or contractual requirements.

• Personal debt

  Money owed by an individual in their own name, including loans, credit cards, tax liabilities, guarantees and other personal obligations.

• Personal exposure

  The amount of financial or legal risk that could fall on an individual personally rather than remaining with a company or another entity.

• Personal guarantee

  A promise by an individual to repay another party’s debt if the primary borrower does not. For directors, it can turn company borrowing into personal exposure.

• Personal guarantee claim

  A creditor’s demand or legal claim against a guarantor for sums said to be due under a personal guarantee.

• Personal guarantee demand

  A formal or informal demand requiring a guarantor to pay under a personal guarantee after the creditor says liability has arisen.

• Personal guarantee exposure

  The amount a guarantor may personally be at risk for under one or more guarantees, subject to the wording, security and enforceability of each agreement.

• Personal guarantee on a lease

  A guarantee under which an individual agrees to meet a tenant company’s lease obligations if the company fails to do so.

• Personal insolvency

  A position where an individual cannot meet debts and may need a formal or informal debt solution such as bankruptcy, an IVA or negotiated settlements.

• Personal liability

  A debt or legal obligation that falls on an individual personally and can potentially be enforced against their own income or assets.

• Personal liability for company debt

  A situation where a director, shareholder or other individual can be pursued personally for a company obligation because a separate legal basis for liability exists.

• Personal liability notice

  A formal notice that can make an individual personally liable for certain company debts in specific statutory circumstances.

• Petitioning creditor

  The creditor who presents a bankruptcy or winding-up petition asking the court to make an insolvency order.

• PG

  Common shorthand for a personal guarantee.

• Phoenix company

  A new company that carries on the business or uses assets of a failed company. This can be legitimate if handled properly, but strict rules apply to assets, names and director conduct.

• Phoenixing

  The process of continuing a business through a new company after an earlier company fails. It must be structured lawfully and not used to evade creditors improperly.

• Piercing the corporate veil

  Another expression for disregarding the normal legal separation between a company and the individuals behind it in exceptional circumstances.

• Positive equity

  A position where an asset is worth more than the debt secured against it.

• Possession

  Legal control or occupation of property or goods. In debt cases it often refers to a lender or landlord seeking control of property through legal proceedings.

• Possession order

  A court order requiring a person to give up possession of property, commonly made in mortgage or tenancy proceedings.

• Possession proceedings

  Court proceedings brought by a lender, landlord or other entitled party seeking possession of property.

• Pre-Action Protocol

  Rules and guidance setting out steps parties should take before starting certain court claims, including exchanging information and trying to resolve the dispute where possible.

• Pre-Action Protocol for Debt Claims

  The protocol in England and Wales governing many debt claims by businesses against individuals before court proceedings are issued.

• Pre-insolvency advice

  Advice taken before a formal insolvency process begins, aimed at understanding risks, options and actions that should or should not be taken.

• Pre-insolvency negotiation

  Negotiating with creditors before formal insolvency to seek time, settlements or restructuring while more options may still be available.

• Pre-pack administration

  An administration where a sale of all or part of the business is arranged before the administrator is appointed and completed shortly afterwards.

• Preference

  A transaction that puts one creditor or guarantor in a better position than they would otherwise have been in insolvency and may be challengeable if statutory conditions are met.

• Preferential creditor

  A creditor given statutory priority for certain debts in insolvency, ranking ahead of ordinary unsecured creditors.

• Preferential payment

  A payment or transaction favouring one creditor over others. In insolvency, some such transactions may be investigated and challenged as preferences.

• Prescribed part

  A ring-fenced portion of floating-charge realisations in certain company insolvencies that is made available for unsecured creditors under statutory rules.

• Principal

  The original amount borrowed or the capital balance outstanding, excluding interest and most charges.

• Priority debt

  A debt that should generally be dealt with urgently because non-payment can carry particularly serious consequences, such as loss of essential services, home or liberty in some cases.

• Priority of security

  The order in which competing secured creditors are entitled to be paid from the same asset.

• Profit

  The financial surplus remaining when income exceeds the relevant costs and expenses over a period.

• Profit and loss account

  A financial statement showing income, costs and profit or loss over a period.

• Prohibited company name

  A company name that a director of an insolvent company may be restricted from using under insolvency law, particularly where it is the same as or similar to the failed company’s name.

• Proof of debt

  A creditor’s formal submission in an insolvency process setting out the amount owed and supporting the right to claim.

• Property debt

  Debt connected with property, including mortgages, bridging finance, secured loans, development finance, rent arrears or property shortfalls.

• Property development

  The acquisition, construction, conversion or refurbishment of property with the aim of creating value or income.

• Property development finance

  Specialist funding used to buy, build or refurbish property, usually with staged drawdowns and a defined repayment or refinance exit.

• Property portfolio

  A group of properties owned or controlled by one person, company or investment structure.

• Protected Trust Deed (PTD)

  A formal Scottish debt solution where a debtor transfers assets and makes agreed contributions to a trustee for creditors, gaining statutory protection once the deed becomes protected.

• Provable debt

  A debt or liability that can be claimed in an insolvency process under the applicable statutory rules.

• Provisional liquidation

  A temporary court appointment of a provisional liquidator before a winding-up petition is finally decided, usually where assets or the company need urgent protection.

Q

• Qualifying debt

  A debt that meets the legal criteria to be included in a particular debt solution, such as a Debt Relief Order or other statutory process.

• Qualifying floating charge

  A floating charge meeting statutory conditions that can give its holder specific rights, including in relation to administration.

• Qualifying Floating Charge Holder (QFCH)

  A secured creditor holding a qualifying floating charge with statutory rights, including the ability in certain circumstances to appoint an administrator.

R

• Ranking

  The order of priority in which creditors or security interests are paid from available assets.

• Re-use of company name

  Using the same or a similar name after a company enters insolvent liquidation. Directors can face restrictions and personal liability if statutory rules are breached.

• Realisation of assets

  The sale, collection or conversion of assets into cash so the proceeds can be applied to debts or distributed in an insolvency.

• Receiver

  A person appointed to take control of specified assets or income for a creditor or under a court order, depending on the legal power used.

• Receiver Order

  A Northern Ireland enforcement order appointing a receiver to collect money or income due to a debtor and apply it towards a judgment debt.

• Receivership

  A process where a receiver takes control of specific secured assets or income to recover money for the appointing creditor.

• Recession

  A broad economic downturn marked by falling activity, which can put pressure on revenue, cash flow, borrowing and debt repayment.

• Recovery action

  Steps taken by a creditor to recover overdue money, from contact and negotiation through to court or enforcement.

• Recovery Loan Scheme (RLS)

  A UK Government-backed business lending scheme introduced after the main COVID emergency loan schemes to support access to finance through accredited lenders.

• Reduced settlement

  A negotiated agreement where a creditor accepts less than the full contractual balance in resolution of the debt.

• Refinancing

  Replacing existing borrowing with new finance, often to change the lender, term, interest rate, security or monthly payment profile.

• Register of Insolvencies

  The Scottish public register containing information about bankruptcies, protected trust deeds, moratoria and other insolvency matters.

• Register of Judgments

  An official record of qualifying court judgments. The relevant register and reporting rules depend on the jurisdiction.

• Regulatory

  Relating to rules and oversight imposed by a regulator, such as the FCA, rather than solely by private contract.

• Release

  An agreement or legal step that frees a party from an obligation, claim, guarantee or security, subject to the terms of the release.

• Release from guarantee

  A written agreement by the creditor that the guarantor is no longer bound by some or all obligations under the guarantee.

• Rent

  Payment made by a tenant for the right to occupy or use property under a lease or tenancy.

• Rent arrears

  Rent that has fallen due but remains unpaid.

• Rent deposit

  Money held as security for a tenant’s obligations under a lease, commonly available to the landlord if specified defaults occur.

• Repayment

  Money paid back towards a loan, debt or other financial obligation.

• Repayment arrangement

  An agreement setting out how a debt will be repaid over time, usually by regular affordable payments.

• Repayment mortgage

  A mortgage where regular payments are designed to cover both interest and capital so the loan reduces over the term.

• Repayment of unlawful dividends

  The return of dividends paid without meeting the legal requirements, which may be sought from shareholders or directors depending on the circumstances.

• Repayment plan

  A structured plan showing how much will be paid towards a debt and when.

• Repayment schedule

  The timetable of payments due under a loan, settlement or other financial agreement.

• Repossession

  A lender taking back possession of secured property or goods after default, usually following the required legal process.

• Restoration

  The process of bringing a dissolved company back onto the Companies House register, either administratively or by court order.

• Restructuring

  Changing debts, operations or ownership arrangements to improve financial stability and avoid or manage insolvency.

• Restructuring plan

  A court-sanctioned company restructuring process under UK law that can compromise creditors or shareholders and, in some cases, bind dissenting classes.

• Revenue

  Income generated from normal business activities before costs and expenses are deducted.

• RLS loan

  A business loan made under the Recovery Loan Scheme through an accredited lender, with government support applying to the lender rather than removing the borrower’s repayment obligation.

S

• Scheme misuse

  Use of a government-backed loan or support scheme contrary to its rules, eligibility conditions or stated purpose.

• Second-charge loan

  A loan secured by a second-ranking charge over property that already has a first mortgage or charge.

• Secondary preferential creditor

  A creditor whose claim is given a lower level of preferential priority than ordinary preferential debts but still ranks ahead of unsecured creditors where the statutory rules apply.

• Second charge

  Security registered behind a first charge over the same asset, meaning the second-charge lender is normally paid after the first-charge lender from sale proceeds.

• Section 455 tax

  A Corporation Tax charge that can arise when a close company makes certain loans or advances to participators and the balance remains outstanding after the relevant deadline.

• Secured creditor

  A creditor with enforceable security over an asset, giving it rights against that asset if the debt is not paid.

• Secured debt

  Debt backed by security over an asset, such as a mortgage over property or a charge over business assets.

• Secured lending

  Lending supported by security over assets, giving the lender additional recovery rights if the borrower defaults.

• Secured loan

  A loan backed by a specific asset or assets that the lender may be able to enforce against if repayments are not made.

• Security

  An asset, charge, guarantee or other right given to support repayment of a debt and improve the creditor’s recovery position.

• Security document

  A legal document creating or recording security for a debt, such as a mortgage, debenture or charge.

• Security for tax

  A requirement by HMRC in certain higher-risk circumstances for a business or individual to provide security against specified future tax liabilities.

• Security interest

  A legal right over an asset granted to secure payment or performance of an obligation.

• Self Assessment

  The HMRC system used by individuals and certain others to report income, calculate tax and pay liabilities not fully collected at source.

• Sequestration

  The Scottish legal term for bankruptcy, under which a trustee administers the debtor’s estate for creditors.

• Service

  In legal procedure, the formal delivery of a document to a person or organisation in a way recognised by the applicable rules.

• Service charge

  A payment under a lease or property arrangement towards costs such as maintenance, insurance or management of shared services.

• Service of documents

  The formal process of delivering legal documents in accordance with required procedural rules.

• Set-off

  The balancing of amounts two parties owe each other so that only the net amount remains payable, where the contract or law permits it.

• Settlement

  An agreement that resolves a debt, claim or dispute on agreed terms without needing the matter to continue to full enforcement or trial.

• Settlement agreement

  A written agreement recording the terms on which a debt or dispute is resolved, including payment and any release of further claims.

• Settlement figure

  The amount a creditor agrees will resolve or discharge a debt under specified settlement terms.

• Settlement offer

  A proposal to resolve a debt or claim by paying an agreed amount or following agreed terms.

• Sheriff

  A judicial office-holder in Scotland who hears cases in the Sheriff Court, including many civil debt and insolvency matters.

• Sheriff Court

  The main local civil and criminal court in Scotland, dealing with many debt, enforcement and insolvency proceedings.

• Sheriff Officer

  An authorised Scottish officer who serves court documents and carries out certain forms of diligence and enforcement.

• Shortfall debt

  The remaining debt after the proceeds from selling secured property or assets are insufficient to repay the lender in full.

• Short settlement

  A negotiated settlement for less than the full outstanding balance, usually paid in a lump sum or over a short period.

• Soft search

  A credit-file check that is not normally visible to other lenders and does not usually affect lending decisions in the same way as a hard search.

• Solicitor

  A qualified lawyer who can advise on legal rights, disputes, contracts and court proceedings and may act alongside a debt strategist where legal representation is needed.

• Solvency

  The ability to meet debts and financial obligations under the relevant financial and legal tests.

• Solvent liquidation

  The winding up of a company that can pay its debts in full, commonly carried out through a Members’ Voluntary Liquidation.

• Statement of affairs

  A formal summary of assets, liabilities and creditor claims prepared for certain insolvency processes to show the financial position at a particular date.

• Statute-barred debt

  A debt where the legal time limit for bringing a court claim may have expired. The position depends on the type of debt, jurisdiction and case history.

• Statutory

  Required, created or governed by legislation rather than only by a private agreement.

• Statutory demand

  A formal demand for payment that can be used as a step towards bankruptcy or company winding-up if the legal conditions are met and the demand is not dealt with in time.

• Statutory interest

  Interest that can be claimed because legislation or court rules allow it, rather than solely because a contract provides for it.

• Stay of enforcement

  A court-ordered or statutory pause preventing enforcement action from continuing for a period or until further order.

• Stay of proceedings

  A pause or suspension of court proceedings, usually ordered by a court or arising automatically under a statutory process.

• Strike off / striking off

  The removal of a company from the Companies House register, after which it is dissolved.

• Successor company

  A company that takes over some or all of the business, assets, customers or operations of an earlier company.

• Supervisor

  The insolvency practitioner responsible for overseeing an approved IVA or CVA and ensuring the arrangement is administered according to its terms.

• Supplier credit

  An arrangement where a supplier provides goods or services now and allows the customer to pay later under agreed terms.

• Surcharge

  An additional charge imposed because of late payment, non-compliance or another event specified by law or contract.

• Surplus income

  Income left after reasonable essential living expenses. In bankruptcy it may be used to assess whether contributions should be made to the estate.

T

• Taking Control of Goods

  The enforcement procedure in England and Wales that allows authorised enforcement agents to take control of eligible goods to recover qualifying debts.

• Tax arrears

  Tax that should already have been paid to HMRC or another tax authority but remains outstanding.

• Tax assessment

  A formal calculation or determination of tax due, made by the taxpayer, HMRC or another tax authority depending on the tax and circumstances.

• Tax debt

  Tax, interest, penalties or other amounts owed to a tax authority and not paid by the due date.

• Tax liability

  The amount of tax a person or business is legally required to pay.

• Tax return

  A document or online submission reporting income, transactions or other information used to calculate tax due.

• Tenant

  A person or business entitled to occupy or use property under a lease or tenancy agreement.

• The Gazette

  The UK’s official public record for statutory notices, including many notices relating to companies, insolvency and creditor actions.

• Third Party Debt Order

  An England and Wales court order that can redirect money owed to a judgment debtor by a third party, often a bank, towards the judgment debt.

• Time to Pay (TTP)

  An HMRC arrangement that allows an individual or business to pay overdue tax by agreed instalments where HMRC accepts the proposal.

• Time to Pay arrangement

  A payment plan agreed with HMRC for clearing tax arrears over an agreed period based on the taxpayer’s circumstances and ability to pay.

• Trade credit

  Credit given by a supplier allowing a business customer to pay for goods or services after delivery rather than immediately.

• Trade creditor

  A supplier or service provider owed money for goods or services supplied in the ordinary course of business.

• Trading while insolvent

  Continuing to operate a business when it is insolvent. This is not automatically unlawful, but directors must act carefully and comply with duties to creditors.

• Transaction at an undervalue

  A transfer, gift or transaction where an insolvent person or company receives significantly less value than it gives, potentially allowing the transaction to be challenged.

• Trial balance

  An accounting report listing ledger balances to check that total debits and credits agree before financial statements are prepared.

• Trust Deed

  A Scottish voluntary arrangement where a debtor transfers assets or makes contributions to a trustee for creditors. It may become a Protected Trust Deed if statutory conditions are met.

• Trustee in bankruptcy

  The person who administers a bankruptcy estate, deals with assets and claims, and distributes available funds to creditors according to law.

• Trustee negotiations

  Negotiations with a bankruptcy trustee about matters such as asset values, beneficial interests, settlements or payments into the estate.

• Turnover

  The total income generated from sales or services before costs and expenses are deducted.

U

• Undischarged bankrupt

  A person who remains subject to bankruptcy because discharge has not yet taken effect and the normal bankruptcy restrictions still apply.

• Undue influence

  Improper pressure that overcomes a person’s free choice when entering a transaction. It can be relevant to the enforceability of guarantees and security in some circumstances.

• Unenforceable

  Not capable of being legally enforced, whether because of law, defective documentation, limitation or another valid legal reason.

• Unenforceable debt

  A debt that a creditor cannot currently enforce through legal proceedings, although the underlying obligation may not always disappear entirely.

• Unlawful dividend

  A dividend paid without meeting the legal requirements for a valid distribution, commonly because there were insufficient distributable profits.

• Unlimited guarantee

  A guarantee with no stated monetary cap, potentially exposing the guarantor to the full guaranteed debt plus any covered interest, costs or other sums.

• Unsecured creditor

  A creditor without specific security over the debtor’s assets, normally ranking behind secured and preferential claims in insolvency.

• Unsecured debt

  Debt not backed by specific security over an asset, such as many credit cards, trade debts and personal loans.

• Unsecured loan

  A loan made without specific security over an asset, relying primarily on the borrower’s promise and creditworthiness.

V

• Validation order

  A court order validating specified company transactions that would otherwise be void because they occurred after a winding-up petition was presented.

• Value Added Tax (VAT)

  A tax charged on many goods and services, collected by VAT-registered businesses and paid to HMRC after allowable deductions.

• Variation

  An agreed or authorised change to the terms of a contract, guarantee, loan, IVA, CVA or other arrangement.

• Vesting

  The legal transfer of ownership or rights from one person to another by operation of law. In bankruptcy, certain assets vest in the trustee.

• Voluntary liquidation

  A liquidation begun by the company’s members rather than directly by a court order. It may be solvent or insolvent depending on the company’s position.

• Voluntary strike off

  A process by which eligible directors apply to Companies House to remove a company from the register and dissolve it.

• Vulture fund

  An informal term for an investor that buys distressed debt or assets, usually at a discount, with the aim of recovering value through repayment, settlement or enforcement.

W

• Waiver

  A voluntary decision by a party not to enforce a particular right, condition or amount, either temporarily or permanently depending on the wording.

• Warrant of control

  An England and Wales court enforcement authority allowing enforcement agents to take control of eligible goods to satisfy a judgment debt.

• Warrant of possession

  A court authority permitting enforcement of a possession order so property can be recovered from the occupier.

• Winding-up order

  A court order placing a company into compulsory liquidation.

• Winding-up petition

  A formal court application asking for a company to be wound up, often presented by a creditor alleging the company cannot pay its debts.

• Winding up

  The legal process of bringing a company’s affairs to an end, realising assets, paying creditors where possible and ultimately dissolving the company.

• Witnessed signature

  A signature made in the presence of an independent witness who confirms that the document was signed by the named person.

• Working capital

  The short-term financial resources available to run day-to-day operations, commonly measured as current assets minus current liabilities.

• Writ

  A formal written court authority or command. In debt enforcement the term often refers to High Court enforcement documents such as a writ of control.

• Write-off

  The cancellation of some or all of a debt so the creditor no longer expects or requires payment of the written-off amount, subject to the legal basis and agreement.

• Writ of control

  A High Court enforcement authority in England and Wales allowing a High Court Enforcement Officer to take control of eligible goods to recover a judgment debt.

• Wrongful trading

  A potential claim against directors who kept trading when they knew, or should have known, insolvent liquidation or administration could not reasonably be avoided and failed to take appropriate steps.

Z

• Zombie company

  An informal term for a business that remains operating but can do little more than service debt and survive, with limited capacity to invest, grow or recover financially.