Topic 11 Flashcards
Administration order
A repayment plan arranged by county courts in England, Wales and Northern Ireland for people with less than £5000 in unsecured debt and at least one county court judgement against them. They pay what the court decides they can afford to them each month and then the court pays money back to their creditors.
APR
Annual percentage rate, the total cost of borrowing over one year, including the interest charged and any fees.
Assets
Things a person or a business owns, for a person this may include property, jewellery or financial products such as company shares.
Balance transfer
Moving the balance on a card from one card provider to the other
Bankruptcy
A situation in which a person cannot pay their debts and is subject of a court order that shares out their assets between their creditors
Benefit
A government payment made to individuals who meet specific conditions to help them meet their living expenses. For example people who are unable to work because of a disability.
Budget
A plan of expected incomings and outgoings over a set time period such as a month.
Citizens Advice
A charity providing free, independent, confidential and impartial advice on citizens’ and consumers’ rights and responsibilities.
Consolidation Loan
A loan used to pay off a number of different debts, meaning that there is only one payment to make each month to a loan company
County Court Judgement CCJ
In England and Wales, a judgement issued by a county court to a person who does not respond to court action from a person or organisation to which they owe money. The CCJ affirms that the money is owed.
Individual voluntary arrangement IVA
A formal alternative to bankruptcy compromising a contractual agreement with those owed money
Insolvency
A situation in which a person cannot repay what they owe because their debts are greater than their assets
Minimal Asset Process MAP
Available in Scotland and similar to a DRO. The MAP is the route into bankruptcy for people with less than £2000 in assets
Money Advice Service
A consumer information service set up by the government to help people make informed financial decisions
Mortgage
A loan taken out to pay for a property, usually over a long term, e.g. 25 years
Overdraft
A facility which allows an account holder to withdraw more money than they actually have in their account
Recession
A period of at least 6 months when the amount of goods and services a company is producing is shrinking
Sequestration
The term for bankruptcy in Scotland, which applies to people who owe more than £1500, have not been bankrupt in the last 5 years and have had court judgements for payment made against them.
Trust deed
Available in Scotland and similar to an individual voluntary arrangement IVA. An insolvency practitioner helps people who are insolvent to make affordable repayments, and after 3 years any outstanding debt is written off.
Utility
An essential public service, such as electricity, gas, water and sewerage.
Credit card
A card that allows the holder to make purchases face to face, online or over the phone, and to withdraw cash from an ATM. The provider pays for the things, and then the card holder pays it back either at once or in instalments.
Credit history
A record of money borrowed and repaid by an individual. These records are held by credit reference agencies and providers will check the individual’s credit history when a prospective customer applies for a borrowing product.
Creditor
A person or organisation to whom someone owes money.
Debt Management Company DMC
An organisation to which a person in debt (debtor) pays what they can afford each month. The DMC then deals with the creditors owed money.
