A to Z
Every letter, court form and credit report loves a bit of jargon. This page cuts through it. Plain English definitions of the words you're most likely to bump into, written the same way we'd say them in a call.
Tip: any highlighted word across the site opens the definition in a pop-up, no page reload needed.
217 of 217 terms
The status of a credit account after the borrower has raised a legitimate dispute in writing (for example an unmet section 77 or 78 request, or a challenge to the balance). The firm must not continue to demand payment without providing clear justification or evidence.
Source: CONC 7.5 (FCA Handbook)
The form a Defendant files to confirm a court claim has been received. It must reach the court within 14 days of service, and filing it extends the deadline for filing a defence to 28 days from service of the particulars of claim.
An Insolvency Service official who decides whether a debtor-application bankruptcy should be granted. Since 2016, most personal bankruptcies in England and Wales are made by an adjudicator rather than a court judge. Decisions are issued within 28 days of the application.
Source: GOV.UK: Becoming Bankrupt
A process where an insolvency practitioner takes control of a struggling company to try to rescue it or get the best result for creditors. The appointment normally runs for one year and proposals must go to creditors within eight weeks.
A specialist debt adviser authorised to submit Debt Relief Order applications to the Insolvency Service on behalf of a debtor. You cannot apply for a DRO yourself; only an approved intermediary can. Approved intermediaries are authorised by a competent authority designated by the Secretary of State under the Insolvency Act 1986 (Schedule 4ZB) and the Debt Relief Orders (Designation of Competent Authorities) Regulations 2009. They give the help free of charge. GOV.UK publishes the current list of competent authorities.
Source: Insolvency Service: DRO guidance for Approved Intermediaries (GOV.UK)
Annual Percentage Rate. The yearly cost of borrowing money, shown as a percentage. It includes the interest and most of the fees, so it is a fairer way to compare one loan or credit card to another.
Source: FCA Handbook CONC App 1.2
An agreement with a creditor to make payments different from those originally due, such as reduced payments for a period. It can be recorded on your credit file; it is not the same as a default and does not itself guarantee that interest or recovery action will stop.
Source: Credit-reporting principles
Money that should have been paid by a certain date but has not been. Once that payment date passes, the amount owed is ‘in arrears’.
Source: FCA Handbook CONC 7.3
Something you own that has real value and could be sold or used to raise money. A house, savings, or shares would all count as an asset.
A court order telling your employer to take money from your wages and send it to a judgment creditor. It can only be used if you are employed, are at least one payment behind, and owe £50 or more.
Source: Form N337 guidance, GOV.UK
The everyday name for Enforcement Agents. Most are certificated by the court but work for private firms acting for a creditor, and they can take control of goods at your home or outside it, such as a vehicle. They must usually give at least 14 days notice before a first visit.
A large one-off lump sum due at the end of a loan or finance agreement. It is usually much bigger than the monthly payments that came before it.
The legal status of someone who cannot pay their debts and has a bankruptcy order against them. Discharge normally happens one year after the order, though payments from income can run for up to three years, and the record stays on a credit file for six years.
Source: Insolvency Act 1986, section 279
The legal process where a person is officially declared bankrupt. It is one of several formal insolvency options in the UK.
The formal court order or Insolvency Service adjudicator's decision that makes a person bankrupt. It starts the bankruptcy, transfers the person's assets to their trustee, and triggers all the restrictions and protections that come with bankruptcy.
Source: GOV.UK: Becoming Bankrupt
The Bank of England’s core interest rate, which influences the rates lenders charge and savers receive. It is set by the Monetary Policy Committee.
Source: Bank Rate, Bank of England
Your actual share of a property's value after paying the mortgage and any secured debts. It is what you would walk away with if the property sold today. In bankruptcy, this is what passes to the trustee.
When a seller does not do what the contract says, for example goods that are faulty, not as described or never delivered. It is one of the two kinds of claim Section 75 covers.
Legal protection in England and Wales that pauses most enforcement, creditor contact, interest and charges on included debts for up to 60 days. You still have to pay ongoing bills and any debts due during the period.
Source: Breathing Space, GOV.UK
Under the Civil Procedure Rules, any day except Saturday, Sunday, a bank holiday, Good Friday or Christmas Day. It sets the clock for deemed service of court documents.
Source: CPR 6.2(b) (justice.gov.uk)
Short-term interest-free credit offered at checkout that splits a purchase into instalments, most commonly three or four payments. Providers include Klarna, Clearpay, PayPal Pay in 3 and Zilch. Historically BNPL sat outside most FCA consumer credit rules, but from 15 July 2026 it became a regulated form of consumer credit under the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025. Missed payments can be reported to credit reference agencies, referred to a debt collection agency, and pursued in the courts.
Source: Regulating Buy Now Pay Later (BNPL), Financial Conduct Authority
In borrowing, capital means the amount actually borrowed, separate from the interest charged on it. A repayment mortgage pays off capital and interest each month, while an interest-only mortgage leaves the capital until the end.
The test in section 123 of the Insolvency Act 1986 for whether a company can pay its debts as they fall due. Failing this test can trigger contractual defaults with lenders and duties on directors.
Source: Insolvency Act 1986, section 123
A request to your card provider to reverse a card payment, made under the card scheme's rules (such as Visa or Mastercard) rather than the law. It works on debit cards too, but it usually has a time limit of around 120 days and is not a legal right.
A court order that secures a judgment debt against your property or other assets, such as land or shares. It does not force a sale by itself, but the debt must be paid from the proceeds if the property is sold, and the creditor can later apply for an order for sale.
A warning placed on fraud prevention databases by a member organisation when it suspects fraud. It usually stays for 13 months and does not change your credit score, but it can hold up applications and account opening.
The court document used to start a claim for money. The creditor asks the court to issue it, the claim starts on the date the court issues it, and it is normally served on you with a response pack.
The person or company who starts a court claim because they believe they are owed something.
A firm that is paid to pursue a compensation claim on your behalf, typically taking a percentage of any redress you receive. CMCs handling financial services claims have been regulated by the FCA since April 2019 and must, under FCA rules, tell you before you sign up that you can pursue the claim yourself for free, including through any regulator-run redress scheme or the Financial Ombudsman Service. Fees are capped by the FCA and legally must be disclosed before you agree to representation.
Source: Claims management companies, Financial Conduct Authority
An asset a lender accepts as security for a loan. If you cannot repay, they can take the asset instead. A vehicle on a logbook loan is a common example. Be very careful before putting up any of your assets as collateral.
A formal deal letting an insolvent company pay creditors over a fixed period while continuing to trade. It needs approval from creditors holding 75% by value of the votes cast.
Interest charged on the balance including interest already added. On credit cards and overdrafts this makes a debt grow faster the longer it is left.
The part of the FCA Handbook holding the detailed rules for consumer credit lending, collection and debt help. It sits on top of the Consumer Credit Act and the FCA’s general Principles.
Source: FCA Handbook CONC 1.1
The FCA rule on statute-barred debts. A firm must not attempt to recover a statute-barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period, and must not continue to demand payment after the customer has stated the debt is statute-barred.
Source: CONC 7.15 (FCA Handbook)
The FCA rules covering how firms must treat customers in or approaching arrears. It requires forbearance and due consideration, and it bans pressuring customers into single lump-sum repayments, unreasonably short timescales, or borrowing to pay.
Source: CONC 7.3 (FCA Handbook)
The FCA rules on how firms may contact customers about a debt. Firms must not contact customers at unreasonable times, must confirm identity before discussing debts, and must respect written requests about when, where and how contact may be made.
Source: CONC 7.9 (FCA Handbook)
The main UK law covering consumer credit and consumer hire agreements. It sets out rights such as copies of your agreement, default notices and court powers, and it now sits alongside FCA rules in the CONC part of the FCA Handbook.
The rule that lets a borrower under a regulated fixed-sum credit agreement ask the creditor in writing for a signed statement and a copy of the executed agreement, on payment of a £1 fee. While the creditor fails to comply, they cannot enforce the agreement.
Source: Consumer Credit Act 1974, section 77 (legislation.gov.uk)
The equivalent of section 77 for running-account credit (credit cards, catalogues, store cards). A written request plus a £1 fee obliges the creditor to supply a signed statement and a copy of the executed agreement, and they cannot enforce the agreement while they fail to comply.
Source: Consumer Credit Act 1974, section 78 (legislation.gov.uk)
An FCA rule requiring financial firms to act to deliver good outcomes for retail customers, including those in financial difficulty. It covers products, price, communications and customer support.
Source: Consumer Duty, FCA
The main law covering goods, digital content and services bought by consumers, plus the fairness of contract terms. It sets out repair, replacement and refund rights.
Source: Consumer Rights Act 2015
Unpaid council tax, which councils can escalate quickly. A missed payment triggers a reminder giving seven days to pay, and continued non-payment can lead to a liability order, deductions from wages or benefits, and enforcement agents.
Source: Pay Council Tax arrears, GOV.UK
A claim you can bring against the Claimant when a court claim has been made against you. If it succeeds, it can cancel out or reduce the original claim.
A court order confirming you owe money after a creditor has taken you to court. A CCJ stays on your credit file for six years unless paid in full within one month.
The Civil Procedure Rule that treats a court claim form as served on the second business day after the claimant completes the relevant step under rule 7.5(1). It applies even if you never open the envelope.
Source: CPR Part 6 (justice.gov.uk)
The ability to borrow money, or to buy goods and services now and pay for them later. Credit cards, overdrafts and loans are all types of credit.
An agreement with a bank or lender that lets you borrow up to a set limit whenever you need to. Credit cards and overdrafts are common examples.
Your record at a credit reference agency, covering credit accounts, payment history, searches, court judgments and electoral roll data. You can ask any agency for a copy and it must respond within one calendar month.
Source: Credit explained, ICO
A company that holds records of how you have managed credit and shares them with lenders. The three main UK agencies are Experian, Equifax and TransUnion, and you can get your file from each of them.
A number produced by a credit reference agency to summarise how your credit history looks. Lenders run their own scoring using your file plus your application, so there is no single official score, and accurate negative entries such as defaults usually stay on file for six years.
The person or business you owe money to. If your debt has been sold on, the new owner becomes the creditor.
The point at which a personal guarantee turns into a demand for payment from you. It normally happens when the borrower defaults or becomes insolvent and the lender calls in the guarantee, and from then on the lender can pursue you personally.
A company that chases money for accounts in default or in breach of the original agreement. They may be collecting for the original creditor, or they may have bought the debt outright.
Source: FCA Handbook CONC 7.3
Taking out one new loan to pay off several debts at once. You are left with one balance and one monthly payment instead of many. It does not clear the debt, it just moves it.
An informal arrangement to pay your unsecured debts at a reduced monthly amount you can afford. Not legally binding, so creditors do not have to accept it, but many will.
A firm that buys unpaid accounts from lenders and becomes the creditor. It has to follow the same FCA rules on arrears and collection as the original lender.
Source: FCA Handbook CONC 7.3
A formal insolvency option for people with low income, few assets and debts under £50,000. Included debts are frozen for 12 months and then written off, and there is no fee to apply.
Source: Debt Relief Orders, GOV.UK
A court order imposing DRO-style restrictions for between two and fifteen years, granted where an official receiver finds the debtor behaved irresponsibly or was not honest and open about their finances before or during a DRO. Grounds are set out at Insolvency Act 1986, Schedule 4ZB, paragraph 2. A voluntary version is called a Debt Relief Restrictions Undertaking (DRRU).
The threshold a domestic energy account must cross before a supplier can consider installing an involuntary prepayment meter. Charges must have been outstanding for three months or more after the bill was issued, the amount must exceed the fuel-specific minimum in Ofgem's SLC 28.4 guidance, and the customer must not be on, or transitioning to, a repayment plan.
Source: Ofgem SLC 28.21 definition
A credit agreement where the lender has arrangements with the seller, such as a credit card or a loan arranged at the point of sale. Section 75 only applies to this kind of agreement, so paying through a middleman can break the chain.
A formal document that transfers ownership of a debt from the original lender to a new owner (usually a debt purchaser). Under the Law of Property Act 1925 section 136 the transfer is legally effective once written notice of the assignment is given to the debtor. In UK practice a Notice of Assignment satisfies that requirement; readers demanding to see the original deed almost never get one because debt is sold in bulk portfolios covering thousands of accounts at once.
Source: Law of Property Act 1925, s.136
The legal rule that treats a court document as received on a fixed day, regardless of whether the person opened or read it. For a first-class-posted claim form in the UK, it is the second business day after posting.
Source: CPR 6.14 (justice.gov.uk)
A default means you have broken the terms of a credit agreement, usually after several missed payments. Once the creditor records it, the default stays on your credit file for six years from the default date, even if you pay the balance later.
An information sheet the Financial Conduct Authority publishes and which a creditor must include with every Default Notice served under section 87 of the Consumer Credit Act 1974. It sets out the debtor's rights, what a default means, and where to get free help. The requirement was strengthened when the rules were rewritten on 2 June 2021.
Source: Consumer Credit Act 1974, section 86A (legislation.gov.uk)
A formal notice a creditor must serve under the Consumer Credit Act before ending a regulated agreement, demanding early payment, repossessing goods or enforcing security. It must say what you have done wrong and give you at least 14 days to put it right.
A charge added to a regulated credit account because you broke the agreement, such as a late payment fee. The creditor must send a notice of default sums, and no interest can be charged on it until 28 days after that notice.
The person a court claim has been made against. The opposite of the Claimant.
The legal name for most buy now pay later plans: interest-free credit repaid in 12 or fewer instalments within 12 months. The FCA has regulated DPC from a separate lender since 15 July 2026.
Source: FCA: Buy now pay later
A person legally appointed to run a limited company. Directors have specific duties under the Companies Act 2006, including a duty to consider creditors once the company is, or is likely to become, insolvent.
Source: Companies Act 2006, section 172
The running record of money a director has taken out of, or put into, their company. An overdrawn director's loan account is money the director owes the company and can be pursued by the company or its liquidator.
Source: Directors' loans, gov.uk
An arrangement between a car finance lender and a broker or car dealer that allowed the broker to increase the interest rate the customer was charged in order to earn a bigger commission. The FCA banned DCAs in January 2021 and has since launched a redress scheme covering car, motorbike, van and campervan finance agreements taken out between 6 April 2007 and 1 November 2024. Around 12.1 million agreements, roughly 37% of those made in that period, are estimated to be eligible, with average compensation of around £830.
The free, independent scheme that resolves unresolved disputes between domestic energy customers and their supplier. You can register a dispute once eight weeks have passed since you first complained, or as soon as the supplier issues a deadlock letter. You have twelve months from that letter to escalate. If accepted, the supplier is legally bound to implement the decision within 28 days.
Source: Energy Ombudsman: Our Process
The formal name for Bailiffs. They use the taking control of goods procedure set out in law to recover money, working under a warrant, writ or other legal authority, and strict rules govern notice, entry, fees and the goods they can take.
The difference between what your property is worth and what you owe on it. If your house is worth £300,000 and your mortgage is £250,000, you have £50,000 of equity.
A scheme that reduces or removes court and tribunal fees for people on low incomes or certain benefits. Refunds are possible if you paid a fee in the last three months while eligible.
Source: Help with court fees, GOV.UK
A per-mile charge applied at the end of a PCP contract when the car has been driven more than the annual mileage limit written into the agreement. The typical limit is 10,000 miles per year but this can be negotiated up (which raises the monthly payments) or down (which lowers them). The charge is triggered only if you hand the car back at the end of the deal. If you pay the balloon payment and keep the car, mileage is not charged.
Source: Buying a car with Personal Contract Purchase (PCP), MoneyHelper
Debts that cannot be written off by a DRO or bankruptcy, even if listed in the application. Common excluded debts are magistrates' court fines, child maintenance and CSA/CMS arrears, student loans, budgeting and crisis loans, criminal confiscation orders, some personal injury awards and secured debts. You remain liable to pay these in full.
The signed credit agreement between the original lender and the borrower. Under sections 77 and 78 of the Consumer Credit Act 1974, a borrower can request a copy in writing on payment of a £1 fee.
Source: Consumer Credit Act 1974, section 77 (legislation.gov.uk)
Funding paid by participating creditors to a debt-advice provider, based on repayments they receive through its Debt Management Plans. With StepChange, your DMP payment is credited towards your debts and the creditor pays the contribution separately; it is not an extra management fee deducted from your payment.
Source: StepChange: how we are funded
The industry benchmark used to decide what counts as normal, acceptable use of a leased or PCP-financed car at the end of the agreement, and what counts as damage that the customer must pay for. The most widely used standard in the UK is published by the British Vehicle Rental and Leasing Association (BVRLA). Fair wear and tear does not cover things like large dents, deep paint scratches, cracked windscreens, kerbed alloys, cigarette burns, or damage from unauthorised modifications.
Source: BVRLA Fair Wear and Tear Guide, British Vehicle Rental and Leasing Association
In bankruptcy, a property that was the sole or principal residence of the bankrupt, their spouse, civil partner, or former spouse or civil partner, on the date of the bankruptcy order. Family homes get extra statutory protections that other properties do not.
A firm's written answer to your complaint, which accepts it, offers to put things right, or rejects it with reasons. Most firms must send it within eight weeks, and you then usually have six months to go to the Financial Ombudsman.
Source: FCA Handbook, DISP 1.6
A link on your credit file created by holding a joint account or joint borrowing with someone. Lenders can see the other person’s credit behaviour, and the link stays until you ask for it to be removed.
The UK regulator responsible for supervising financial services firms and enforcing the rules that protect consumers. In consumer credit and car finance the FCA sets the rulebook that lenders, brokers and dealers must follow, investigates market-wide problems, and can order redress schemes where firms have breached the rules. The FCA replaced the Financial Services Authority in April 2013 under the Financial Services and Markets Act 2000, as amended by the Financial Services Act 2012.
The independent UK service that resolves complaints between consumers and financial firms, such as banks, lenders and debt collectors. It is free to use, and its decision binds the firm if you accept it. You can go to the Ombudsman once the firm has sent its final response, or if eight weeks pass without one; you usually have six months from the final response.
Source: FCA Handbook, DISP 1.6 and 2.8
A written breakdown of your income, spending and debts, sent to a creditor or the court. The debt pre-action protocol asks creditors to invite one before a claim is issued.
When a creditor holds back from taking normal enforcement action. It usually means agreeing a temporary arrangement while your circumstances improve.
Source: FCA Handbook CONC 7.3
A pseudolaw belief that ordinary UK statute law and contracts only apply to those who consent to them, so an individual can opt out of debts, council tax, mortgages, and court judgments by declaring themselves a 'freeman'. UK courts have consistently rejected these arguments as having no legal basis, and the FCA has warned that firms selling this idea are running debt elimination scams.
Source: FCA — Scams offering to 'write off debts' targeting UK consumers
The estimated value of a car at the end of a PCP contract, set by the finance company at the start of the deal. It becomes the balloon payment: the lump sum due if you want to buy the car outright when the contract ends. Because the finance company guarantees this figure, they carry the risk if the car is worth less than the GMFV at the end. If it is worth more, that extra value is called positive equity and can go towards a new deal.
Source: Buying a car with Personal Contract Purchase (PCP), MoneyHelper
A person or business that agrees to take legal responsibility for a debt if the borrower cannot pay. Common on tenancy agreements, loans and business finance.
Repeated conduct that alarms you or causes you distress. It can be a civil wrong and a criminal offence under the Protection from Harassment Act 1997, and the FCA's CONC 7.9 rules separately limit how firms contact people about debts.
Source: Protection from Harassment Act 1997 (legislation.gov.uk)
A record left on your credit file when a lender checks it as part of a credit application. Other lenders can see it, and lots of them in a short time can count against you.
Source: Credit explained, ICO
The academic framing of ikigai developed by Prof Akihiro Hasegawa, a Japanese clinical psychologist at Toyo Eiwa University. In his 2003 paper in the Japanese Journal of Public Health and in his subsequent work on the IKIGAI Objects Scale, Hasegawa treats ikigai not as a single overarching purpose but as a set of plural ikigai objects: concrete daily sources of meaning that people can name individually, such as a friendship, a hobby, a garden, a prayer, or a caring relationship. This framing sits at the heart of modern Japanese ikigai research and stands in deliberate contrast to the four-circle Western Venn diagram.
An enforcement officer who acts under a High Court writ rather than a county court warrant. Judgments can be transferred up to the High Court for enforcement, and their fees are usually higher.
Source: CPR Part 83
A regulated credit agreement where you hire an item, usually a car, and pay for it in fixed monthly instalments. The finance company owns the item during the term. You only own it once the final payment has been made. HP is regulated by the Consumer Credit Act 1974 and gives you the same statutory protections as a PCP, including voluntary termination under Section 99 and protected goods status under Section 90.
Source: Consumer Credit Act 1974, Part V, legislation.gov.uk
A Japanese word that literally means life-worth (iki, life, plus gai, worth). It is the felt sense that life is worth living. In the original Japanese sources, from Mieko Kamiya in 1966 to Akihiro Hasegawa and Ken Mogi today, ikigai is usually described as plural and small, made up of daily sources of meaning such as a hobby, a routine, or a relationship, rather than one grand career-shaped purpose. The four-circle Venn diagram that dominates Western search results is not part of the Japanese tradition; it was drawn by a Spanish astrologer in 2011 to illustrate a different word (proposito) and relabelled ikigai by a Western coach in 2014.
Source: Ikigai Tribe FAQ (misattribution of the Venn diagram)
The standard budget format used across the debt sector, known as the Standard Financial Statement. It sets out income, essential spending and what is left for creditors.
A written agreement where a bankrupt person pays a portion of their surplus monthly income to the trustee for up to three years. It is voluntary. If refused, the trustee can ask the court for an Income Payments Order instead.
A free, publicly searchable register maintained by the Insolvency Service listing all current bankruptcies, DROs, IVAs and related restrictions in England, Wales and Northern Ireland. A DRO entry is removed three months after the DRO period ends; a DRRO entry stays for the lifetime of the order plus three months.
A formal, legally binding agreement to pay all or part of your debts through an Insolvency Practitioner, usually over five years. It starts once creditors holding 75% by value of the voting debt agree, and it then binds all included creditors, with any remaining included debt written off at the end.
Source: IVAs, GOV.UK
One of the three documents a creditor must enclose with a Letter of Claim under the Pre-Action Protocol for Debt Claims. It explains the debtor's rights and the 30-day time limit to reply.
Source: Pre-Action Protocol for Debt Claims (justice.gov.uk)
When someone cannot pay their debts as they fall due. It does not mean you have zero money, it means you cannot keep up with the payments.
Source: Insolvency Act 1986, section 268
A licensed professional authorised to act in formal insolvencies for people, companies and partnerships. IPs supervise IVAs, CVAs, liquidations and administrations, and can act as trustee in bankruptcy, although many bankruptcies are handled by the Official Receiver.
The government agency that administers personal bankruptcy in England and Wales, employs Official Receivers, and adjudicates on bankruptcy applications. Part of the Department for Business and Trade.
Source: GOV.UK: The Insolvency Service
The state of being unable to pay your debts. Someone who is insolvent may not be bankrupt, but they cannot meet their financial obligations as they fall due.
Source: Insolvency Act 1986, section 268
A court order to pay a judgment debt by monthly instalments rather than in one go. If the amount is unaffordable you can apply to vary it based on your income and outgoings.
Source: Pay a CCJ, GOV.UK
A prepayment meter installed for debt without the customer's clear consent. It covers both a physical meter fitted under warrant and a smart meter switched remotely to prepay mode without unmistakable, non-pressured consent. Only allowed once every Standard Licence Condition 28 requirement has been met, including a Site Welfare Visit and the Precautionary Principle.
Source: Ofgem SLC 28.21 definition
Sharing ownership of a property or other asset with one or more people, either as joint tenants with equal rights to the whole or as tenants in common with set shares. Responsibility for a debt depends on who signed the agreement or charge, not simply on owning the asset.
Source: Joint property ownership, GOV.UK
Two or more parties are each responsible for the whole amount, so you can claim it all from any one of them. Under Section 75, the seller and the credit card provider are jointly and severally liable to you.
A judgment entered without a trial because the defendant did not file an acknowledgment of service or a defence in time. The court simply decides the claimant wins.
Source: CPR Part 12
Using borrowed money to invest, hoping the return beats the cost of the borrowing. A buy-to-let mortgage is a common example, and the risk is that losses grow just as fast as gains while the loan still has to be repaid.
The statute that makes debt sales legally effective in England and Wales. Section 136(1) provides that an absolute written assignment of a debt, of which written notice has been given to the debtor, passes the legal right to collect, all legal remedies, and the power to give a valid discharge — without needing the original lender's involvement. This is the reason a debt buyer can legitimately chase you for a debt they bought from your original lender.
Source: Law of Property Act 1925, s.136
A warning letter a creditor must send before starting a county court claim for a debt. Under the Pre-Action Protocol for Debt Claims it is called a Letter of Claim, comes with an information sheet and reply form, and you get 30 days to reply before a claim can be issued.
Source: Pre-Action Protocol for Debt Claims, Ministry of Justice
A formal letter a creditor must send before starting a court claim under the Pre-Action Protocol for Debt Claims. It must set out the amount, the agreement details, an up-to-date statement, and be accompanied by an Information Sheet, a Reply Form and a Financial Statement form.
Source: Pre-Action Protocol for Debt Claims (justice.gov.uk)
Money you owe or a legal obligation to pay someone. Loans, credit cards, arrears and court judgments are all liabilities, and in insolvency law the word covers any obligation to pay money or money’s worth.
Source: Insolvency Act 1986, section 382
The Act that sets time limits for starting a court claim. For most simple contract debts in England, Wales and Northern Ireland, the limit is six years from the date the debt became due.
A business set up as a separate legal person from its owners. The company's debts are usually the company's, not the shareholders' or directors', unless a director has signed a personal guarantee.
The rule that members of a limited company are only responsible for the amount unpaid on their shares, or the amount they have guaranteed. Company debts stay with the company unless something else, such as a personal guarantee, makes them personal.
Source: Companies Act 2006, section 3
A loan that pays for one specific item or service named in the agreement, set up with the seller's involvement. Section 75A lets you claim against the lender for items over £30,000, once you have tried the seller first.
A loan secured on a vehicle you already own using a document called a bill of sale, which transfers ownership to the lender until the loan is repaid. If you fall behind and the required notices have been served, the lender can usually repossess and sell the vehicle without going to court first.
Source: Bills of Sale Act (1878) Amendment Act 1882, legislation.gov.uk
A rule that stops a trustee applying to sell, take possession of, or charge a bankrupt's home if the bankrupt's share is worth less than £1,000. The court must dismiss the application.
An informal way of saying a credit card or credit facility has been used up to its limit. There is no more available credit to spend.
A way of settling a dispute without a hearing, where a neutral mediator speaks to each side and looks for common ground. If you defend a money claim of £10,000 or less, you must attend the free court mediation appointment, which lasts up to one hour.
A version of Breathing Space for people receiving mental health crisis treatment. It lasts as long as the crisis treatment plus 30 days, and an approved mental health professional confirms eligibility.
The smallest monthly amount a card provider will accept to keep the account up to date. Paying less can bring fees and eventually a default, and paying only the minimum for long periods puts you in persistent debt, where the lender must contact you and help you pay the balance down faster.
Source: FCA Handbook CONC 6.7
An untrue statement of fact by a seller that led you to make a purchase. If you paid with credit, it can give you a Section 75 claim against the lender as well as the seller.
A legally protected period during which listed creditors cannot pursue you for payment or take enforcement action. The 12-month DRO moratorium under the Insolvency Act 1986 Part 7A is the most common example; interest and charges on included debts are also frozen for that period.
Source: Insolvency Act 1986, Part 7A
A loan secured against a property. If payments are missed the lender can start court action, and in England and Wales it normally needs a court possession order before it can repossess and sell your home.
Source: Home repossession, GOV.UK
Court action by a mortgage lender to take back a home after arrears build up. Free legal help is available at court in England and Wales through the Housing Loss Prevention Advice Service.
Source: Home repossession, GOV.UK
The standard court form used to start a claim under Part 7 of the Civil Procedure Rules. Money claims are often issued online instead, but the paperwork you receive works the same way.
Source: Form N1, GOV.UK
The general court form used to ask a judge for something in an existing case, for example to set aside a judgment, vary payments or suspend enforcement.
Source: Form N244, GOV.UK
The response pack sent with a county court claim. The N9 acknowledgment of service tells the court you have received the claim and gives you 28 days instead of 14 to file a defence.
Source: Form N9, GOV.UK
The position where the amount you still owe on an asset is greater than what the asset is currently worth. On a PCP, negative equity usually arises if you try to end the deal early and the car's trade-in value is lower than the outstanding balance. In that situation you either need to pay the difference in cash, roll the shortfall into a new finance agreement (which just moves the debt forward), or use a statutory route such as voluntary termination under Section 99 to walk away without owing the shortfall.
Source: Consumer Credit Act 1974, Section 99, legislation.gov.uk
Debts where the worst outcome is usually court action to recover money, such as credit cards, overdrafts, catalogue accounts and unsecured loans. They are handled after priority debts.
The written notice telling you your debt has been transferred to a new owner. The transfer takes legal effect once that notice has been given to you.
A short statement you can add to your credit file to explain an entry, for example why an account fell into arrears. Lenders reading your file see it alongside the data.
Source: Credit explained, ICO
A formal challenge to information held about you, asking the agency or lender to check and correct it. Data protection law gives you the right to have inaccurate personal data put right.
A civil servant at the Insolvency Service who acts as an officer of the court in bankruptcies, compulsory liquidations and debt relief orders. Duties include taking control of assets, dealing with creditors and investigating the debtor’s affairs.
Source: Insolvency Act 1986, section 399
The Office of Gas and Electricity Markets, the UK regulator for domestic gas and electricity suppliers. Ofgem writes the standard licence conditions every supplier must follow, publishes guidance on debt and vulnerability, and can take enforcement action against suppliers who breach the rules.
Source: Ofgem
A large Japanese cohort study of 43,391 adults aged 40 to 79 in the Ohsaki region of Miyagi Prefecture, first surveyed in 1994 to 1995 and followed for seven years. Published in Psychosomatic Medicine in 2008 by Sone and colleagues, it asked respondents whether they had a sense of ikigai and tracked deaths from all causes. After adjusting for age, sex, education, marital status, occupation, body mass index, medical history, smoking, alcohol, walking, sleep and reported mental stress, the group who said they had no ikigai had a hazard ratio of 1.5 (95% CI 1.3 to 1.7) for all-cause mortality. It is the strongest single piece of peer-reviewed evidence linking a felt sense of purpose to longevity.
The legal-community label for the family of arguments used by Freeman on the Land, Sovereign Citizen, and Strawman promoters. The label was coined in the Canadian case Meads v Meads [2012] ABQB 571 and is now used routinely by UK judges to describe submissions that borrow from these theories. Any pleading identified as OPCA is at high risk of being struck out and its author declared vexatious.
A court order that forces the sale of a property to satisfy a debt. It usually follows a Charging Order that has not been repaid.
The company you first signed the credit agreement with. With a Barclaycard credit card, the original creditor is Barclaycard. If the debt is later sold, the buyer becomes the new creditor.
Clearing a debt with a lump sum smaller than the full balance, with the creditor writing off the rest. It is often called a full and final settlement, and the account is usually marked ‘partially settled’ on your credit file, which lenders can see for six years.
A short-term, high-cost, unsecured loan meant to be repaid around your next payday. Since January 2015 a price cap has applied: interest and charges are limited to 0.8% a day, default fees to £15, and you can never repay more than double what you borrowed.
Source: High-cost short-term credit, FCA
Pay As You Earn. The HMRC system employers use to deduct income tax, National Insurance and student loan repayments from your wages before they hit your bank account. Student loan is collected through PAYE for anyone employed, based on earnings in each pay period rather than the annual total.
Source: GOV.UK: Understanding your pay
An agreement with your lender to pause payments for a set period. Interest usually still adds up during the break.
Where you have paid more in interest and charges than you have repaid of your credit card balance over 18 months. The lender then has to contact you and help you clear the balance faster.
Source: FCA Handbook CONC 6.7
A court order preventing the debtor's current address from being published on the Individual Insolvency Register where that publication would put them, or a family member living with them, at risk of violence. Must be obtained before the DRO application is submitted; the application requires a witness statement and supporting evidence.
A long-term car lease. You pay a monthly fee to use the car for a fixed period and hand it back at the end. You never own the car and there is no option to buy it. Because PCH is a hire agreement rather than a credit agreement, it sits outside the Consumer Credit Act 1974, so Section 99 voluntary termination and Section 90 protected goods do not apply. It is also excluded from the FCA £830 discretionary commission arrangement redress scheme. Mileage limits and fair wear and tear apply at handback.
Source: MoneyHelper: Car leasing (PCH)
A form of car finance where you pay a deposit, then monthly instalments over two to four years covering only part of the car's value. At the end you choose one of three options: pay the balloon payment to own the car outright, hand it back at no further cost provided mileage and condition terms are met, or use any equity as a deposit on a new PCP. PCP is a regulated hire-purchase agreement under the Consumer Credit Act 1974, which brings the Section 99 voluntary termination right and Section 90 protected goods rules into play once you have paid at least half the total amount payable.
Source: Consumer Credit Act 1974, Part V
A binding promise by a director or owner to repay business borrowing personally if the business defaults or becomes insolvent. It puts personal assets, sometimes including a home, at risk.
A loan taken out by an individual, usually unsecured, meaning it is not tied to a property or vehicle.
Source: Personal loans, MoneyHelper
A court order requiring you to give up a property by a set date. If it is not followed, the creditor or landlord can apply for a warrant for possession so enforcement agents carry it out.
Insurance sold alongside loans, cards and mortgages to cover repayments if you could not work. The deadline to complain to the firm that sold it was 29 August 2019, with limited exceptions.
Source: PPI complaints, FCA
A set of rules a business must follow before taking an individual to court for money. It requires a Letter of Claim, an Information Sheet, a Reply Form and a Financial Statement form, and it gives the debtor 30 days to reply before proceedings can start.
Source: Pre-Action Protocol for Debt Claims (justice.gov.uk)
An Ofgem rule that requires energy suppliers to start from the assumption that any domestic customer facing an involuntary prepayment meter for debt is in financial difficulty and therefore more likely to self-disconnect. The burden is on the supplier to prove installation is safe, not on the customer to prove hardship.
Source: Ofgem SLC 28.22 definition
An energy meter that requires the household to pay in advance for gas or electricity, usually by topping up a key, card or smart-meter account. If credit runs out, supply stops (called self-disconnection). Suppliers can move a customer to a prepayment meter to recover an unpaid debt, but only under strict Ofgem rules on vulnerability and welfare.
Source: Ofgem: prepayment meter rules
A debt with serious consequences if ignored, such as rent or mortgage arrears, council tax, energy bills, court fines, tax and child maintenance. These are dealt with before other debts.
A free register kept by every UK energy supplier and network operator listing customers who need extra help. Eligibility includes state pension age, pregnancy or young children, disability or long-term medical conditions (including mental health), reliance on powered medical equipment, difficulty communicating in English, and recent life changes such as bereavement or job loss.
Written evidence a collector holds the right to pursue a specific debt from a specific person, including a copy of the signed agreement and a full statement of account. Under sections 77 and 78 of the Consumer Credit Act 1974, a borrower can require this in writing for £1.
Source: Consumer Credit Act 1974, section 77 (legislation.gov.uk)
Goods bought on a regulated hire purchase or conditional sale agreement, including cars on PCP or HP, where the debtor has paid one third or more of the total price. Under Section 90 of the Consumer Credit Act 1974, the finance company cannot recover possession of protected goods from the debtor without a court order. This means a repossession agent cannot legally take the car once you have paid one third of the total price, unless the finance company first obtains a court order.
Source: Consumer Credit Act 1974, Section 90, legislation.gov.uk
A formal Scottish arrangement where you pay a trustee for an agreed period and remaining included debts are written off. Once protected, it binds creditors who did not object.
Source: Protected Trust Deeds, AiB
The debts a Debt Relief Order can include and eventually write off. Most unsecured consumer debts qualify, including credit cards, personal loans, overdrafts, catalogue and BNPL, benefit overpayments, council tax arrears, rent arrears and utility arrears. Total qualifying debts must not exceed the £50,000 DRO threshold.
The point at which property that had passed to the trustee returns automatically to the bankrupt person, without paperwork. Under section 283A of the Insolvency Act 1986, this happens to the family home three years after the bankruptcy date if the trustee has taken no action.
An industry-wide compensation scheme set up by the FCA under sections 404 and 404A of the Financial Services and Markets Act 2000, used where a widespread regulatory failure has caused consumer loss. Firms must review affected cases against the scheme rules, calculate compensation using a set methodology, and pay eligible consumers, all under FCA supervision. Consumers do not need a solicitor or claims management company to use a redress scheme. The current motor finance redress scheme (PS26/3) covers agreements taken out between 6 April 2007 and 1 November 2024.
Source: PS26/3 Motor finance consumer redress scheme, Financial Conduct Authority
A credit agreement that falls under the Consumer Credit Act 1974 and the FCA's Consumer Credit sourcebook (CONC). Most personal loans, credit cards, catalogues, and store cards are regulated credit agreements.
The standard form the debtor returns after a Letter of Claim. Returning it within 30 days buys at least another 30 days before court proceedings can start, and lets the debtor request more information or state that they are seeking debt advice.
Source: Pre-Action Protocol for Debt Claims (justice.gov.uk)
A bank’s right to move money from one of your accounts to cover a debt you owe the same bank. It reduces or wipes out what the bank owes you on the account it takes from.
Retail Price Index. An older measure of inflation calculated by the Office for National Statistics. The interest rate on Plan 2 and Plan 3 (postgraduate) student loans is set with reference to RPI, though a temporary cap can override the formula. For 2026-27, Plan 2 and Plan 3 interest is capped at 6% by SI 2026/743, regardless of the RPI figure.
Source: The Education (Student Loans) (Repayment) (Amendment) Regulations 2026, SI 2026/743
The amount still owed after a repossessed vehicle is sold for less than the finance balance. On hire purchase or conditional sale you can limit what you owe by ending the agreement voluntarily, which caps liability at half the total price, and once you have paid a third the lender usually needs a court order to repossess.
Source: FCA Handbook, CONC 7.3 (treatment of customers in arrears)
The amount still owed after a repossessed home is sold for less than the mortgage balance. Your lender must tell you promptly if there is a shortfall, and if it intends to recover it, it must notify you within six years of the sale (five years for Scottish contracts).
Source: FCA Handbook MCOB 13.6
The old no-fault eviction notice used by private landlords in England. Section 21 notices can no longer be issued from 1 May 2026, and the final date to apply to court using an existing one was 31 July 2026.
A right that makes your credit provider jointly responsible with the retailer if goods or services bought on credit are faulty or misdescribed. It applies to items costing more than £100 and up to £30,000.
A written request, with a £1 fee, for a copy of a fixed-sum credit agreement and payment details. While the creditor fails to comply, it cannot enforce the agreement.
The same right for running-account credit such as credit cards: a written request and £1 fee for a copy of the agreement and account information. Enforcement is blocked while the creditor cannot comply.
A notice a landlord in England serves to seek possession on legal grounds, such as rent arrears, before applying to court. The notice period depends on the ground used.
A debt tied to an asset, such as a mortgage on a home or finance on a car. If you fall behind, the creditor can take steps to recover the asset, though for a home it normally needs a court possession order first.
The HMRC tax return system for people whose income is not fully taxed through PAYE — usually the self-employed, company directors and people with untaxed income. If you have a student loan and file Self Assessment, your student loan deduction is calculated on your total profit above your plan threshold and is due by 31 January after the tax year ends.
The Scottish equivalent of bankruptcy, administered under Scottish law with the Accountant in Bankruptcy overseeing cases. Applications go through the AiB’s online system.
Asking the court to cancel a judgment. The court must set aside a default judgment that was wrongly entered, and may set one aside if you have a real prospect of defending the claim or there is another good reason.
Source: CPR Part 13
The gap between what an asset is sold for and what is still owed on it. Common on repossessed properties and vehicles.
Source: FCA Handbook MCOB 13.6
A contract that is not made under deed. Most consumer credit agreements are simple contracts, and the six-year limitation period under section 5 of the Limitation Act 1980 applies to them.
Interest worked out only on the original amount borrowed, so the charge does not grow on itself. County court judgment interest is calculated this way.
A physical visit to a domestic customer's home by appropriately trained supplier staff, required before an involuntary prepayment meter can be installed. Its purpose is to speak to the household, identify any vulnerability, and decide whether prepay would be safe and reasonably practicable. A phone call does not satisfy this requirement.
The simplified court route for lower value claims, where hearings are informal and recoverable legal costs are limited. Most consumer debt claims are handled here.
Source: CPR Part 27
A check on your credit file that only you can see, used for quotations, eligibility checks and identity checks. It does not affect how lenders view you.
Source: Credit explained, ICO
A person running a business as an individual, with no separate legal company. The person and the business are the same for debt purposes, so business debts are personal debts.
Source: Set up as a sole trader, gov.uk
A related pseudolaw belief, imported mainly from North America, that a person is a sovereign individual not subject to government or court authority. Marketed alongside Freeman on the Land and Strawman theories by firms offering to 'write off' debts. UK courts treat sovereign-citizen submissions as having no cause of action.
Source: FCA — Scams offering to 'write off debts' targeting UK consumers
A binding rule inside every domestic energy supplier's gas or electricity supply licence. Suppliers cannot lawfully operate without a licence, so the conditions inside it operate like consumer protection law. SLC 27 sets ability-to-pay duties, SLC 27A covers repayment plans, SLC 28 controls disconnection and involuntary prepayment meters.
Source: Ofgem: Electricity Supply Standard Consolidated Licence Conditions
The part of the court response pack where you set out your income, outgoings and what you can afford to pay each month. The court uses it to decide instalments if you admit the debt.
Source: Form N9, GOV.UK
A debt a creditor can no longer take to court because the time limit has run out. For most unsecured debts in England and Wales the limit is six years from when the cause of action arose, and a payment or a written acknowledgment restarts the clock. The debt still exists, and Scotland has a five-year rule where the debt is extinguished.
Source: Limitation Act 1980, section 5
A formal written demand for payment that gives 21 days to pay or reach an arrangement. Ignoring it lets the creditor petition for bankruptcy or to wind up a company, and debts over six years old normally cannot be pursued this way.
Source: Statutory demands, GOV.UK
A court decision to pause or suspend a legal case, either temporarily or indefinitely.
Source: Civil Procedure Rules Glossary
A pseudolegal argument that a person exists as two entities: a flesh-and-blood human and a separate legal 'Strawman' created by their birth certificate. Followers argue only the Strawman is liable for debts. The Financial Conduct Authority has publicly warned that firms promoting this idea are running scams, and UK courts have consistently rejected the argument, describing it as incoherent and untenable.
Closing a limited company by removing it from the Companies House register. It is only allowed where the company has not traded for three months, is not facing liquidation and has no creditor arrangement such as a CVA.
Source: Strike off your company, GOV.UK
The government-owned body (SLC) that administers UK student loans on behalf of the Department for Education, the Welsh Government, the Scottish Government and the Northern Ireland Executive. The SLC issues the loan, tracks the balance, applies interest, records repayments collected by HMRC through PAYE or Self Assessment, and cancels the balance when a plan's write-off date is reached.
Source: GOV.UK: Student Loans Company
A possession order that will not be acted on as long as you keep to conditions, usually paying the normal amount plus something towards arrears. Break the terms and the other side can ask to enforce it.
Source: CPR Part 55
A court order that freezes money someone else holds for you, most often your bank, and then pays it to a judgment creditor. It only works on money held in your name alone.
Source: EX325, GOV.UK
A court order under the Consumer Credit Act that gives you more time to pay a regulated credit agreement, by setting instalments the court thinks are reasonable and sometimes changing the interest.
Small payments, sometimes as little as £1 a month, offered when you cannot afford the contractual amount. Creditors do not have to accept them, interest and charges may keep running unless frozen, and the arrangement will usually show on your credit file.
Source: FCA Handbook, CONC 7.3 (treatment of customers in arrears)
The total sum a customer will pay under a regulated credit agreement, including the amount borrowed, all interest, and any fees or charges built into the agreement (but excluding late payment fees and other default charges). This is the figure used to calculate the 50% threshold for voluntary termination under Section 99 of the Consumer Credit Act 1974. On a PCP, the total amount payable includes the deposit, all monthly payments across the term, and the balloon payment.
Source: Consumer Credit Act 1974, Section 189, legislation.gov.uk
A voluntary agreement in Scotland transferring your assets to a trustee who pays your creditors from agreed contributions. It only binds all creditors once it becomes protected.
Source: Protected Trust Deeds, AiB
The person legally in charge of a bankrupt's estate. Their job is to gather assets, sell them if worthwhile, and pay creditors. In most consumer bankruptcies this is the Official Receiver.
Source: Insolvency Act 1986, section 305
A debt the creditor cannot pursue through court while a specific defect continues. The most common trigger is a failure to answer a Consumer Credit Act 1974 section 77 or 78 request within the prescribed period, which suspends enforcement under s.77(4)(a). Unenforceable does not mean written off. The debt still exists, still shows on your credit file, and the creditor can restart enforcement the moment the paperwork is produced.
A power the court has under section 140A of the Consumer Credit Act 1974 to open up a credit agreement, or a related guarantee, if the deal or the lender's conduct is unfair to the borrower. The court can rewrite or cancel terms.
A debt with nothing attached to it, so no asset can be taken if it is not paid. Credit cards, store cards, overdrafts and most personal loans are all unsecured.
A person the courts identify as bringing claims that are frivolous, without merit, or an abuse of process. Judges can strike out such claims, order the person to pay the other side's legal costs, and in serious cases restrict their future access to the courts. UK judges have used this label repeatedly against litigants who advance Freeman on the Land or Sovereign Citizen theories in mortgage, council tax, and debt recovery proceedings.
Handing a car back to the finance company without using your statutory right of voluntary termination. Unlike voluntary termination, voluntary surrender leaves you liable for the full outstanding balance under the agreement, minus whatever the finance company gets when it sells the car. Any shortfall becomes a debt you still owe. Voluntary surrender is almost always worse for the customer than voluntary termination and should only be considered if the Section 99 conditions cannot be met.
A statutory right under Section 99 of the Consumer Credit Act 1974 that lets you end a regulated hire purchase or conditional sale agreement, including a PCP, by giving written notice. Under Section 100 your liability is capped at half of the total amount payable under the agreement. If you have already paid to that halfway line, you can hand the car back and owe nothing further. This right cannot be removed by the contract.
Source: Consumer Credit Act 1974, Section 99, legislation.gov.uk
Under FCA guidance, a vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. Vulnerability can be caused by health, life events, resilience or capability. FCA-authorised firms have to identify vulnerable customers and treat them with appropriate care under the Consumer Duty.
Source: Guidance for firms on the fair treatment of vulnerable customers (FG21/1), FCA
A county court document that authorises enforcement agents to take control of goods to pay a judgment debt. It lasts 12 months and can be reissued.
A written authorisation from a magistrate allowing an energy supplier (or its agents) to enter a property, if need be by force, to disconnect the supply or install a prepayment meter for debt. Granted under the Rights of Entry (Gas and Electricity Boards) Act 1954. The warrant expires 28 days after grant or when its purpose is met, whichever is earlier.
Source: Rights of Entry (Gas and Electricity Boards) Act 1954, s.2
A court order that closes a business down and puts its assets in the hands of a liquidator to be sold and shared out among creditors.
Source: Insolvency Act 1986, section 122
A court application by a creditor to force a company into compulsory liquidation. The creditor must be owed £750 or more and be able to show the company cannot pay, and a statutory demand often comes first.
A company that has been ‘wound up’ has stopped trading. Its assets are sold to pay creditors and it is removed from the Companies House register.
Trading on when a director knew, or should have known, the company had no reasonable prospect of avoiding insolvent liquidation. A court can order the director to contribute personally to the company's debts.
Source: Insolvency Act 1986, section 214
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