Glossary

A

Annual Fee - A yearly fee charged by credit grantors for the privilege of using a credit card.

Annual Return  - It is a legal requirement that a limited company must draw up an annual summary of its capital and shares, together with an up-to-date list of directors and members (shareholders) including their names, addresses and number of shares held, occupation and other directorships of a director and statement of the indebtedness of the company in respect of secured charges.

Annual Percentage Rate - Often abbreviated to APR - the cost of credit at a yearly rate. 

Applicant - A person applying for credit privileges, employment or some other benefit.

Asset - Anything you own that has value or use.

Account Holder - The person authorised by the contractually responsible party to use the account.

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B

Bankruptcy - A proceeding in UK Courts that may legally release a person from repaying debts owed. 

Bankruptcy Discharged - A court order terminating bankruptcy proceedings on old debts.

Bankruptcy Dismissed - A court order that denied one's bankruptcy petition making the debtor still liable for all debts.

Budget - A financial plan for saving and spending money. 

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C

CCA -  Consumer Credit Association

Charge Off - Accounting term to indicate that the creditor does not expect to collect a balance owing on an account.

Consumer Credit Counselling Service - Organisations which help consumers find a way to repay debts through careful budgeting and management of funds. These are usually nonprofit organisations, funded by creditors. By requesting that creditors accept a longer pay-off period, the counselling services can often work out a successful repayment plan.

Credit - A trust or a promise to pay later for goods or services purchased today.

Credit History - Record of how a consumer has paid credit accounts in the past, used as a guide to determine whether the consumer is likely to pay accounts on time in the future.

Credit Limit -  The maximum amount of money you can charge on a particular credit account.

Credit Report - A record or file to a prospective lender or employer on the credit standing of a prospective borrower, used to help determine credit worthiness.

Credit Reporting Agency - A company which gathers, files and sells information to creditors and/or employers, to facilitate their decisions to extend credit or to hire

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D

Debt Collection Agency -  A company which provides a debt recovery service for the recovery of overdue accounts for their clients.

Dormant Company - A limited company that has never started, or has ceased, its trading activities but has not been dissolved. Annual returns are still filed, but the accounts state that the company did not trade during the year. A company is kept on the live index in this way so that it can be easily reactivated if it wants to start trading again in the future

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E

Enforcement - Once a debt has been sued for successfully and judgEment entered against the debtor there are various methods of physically recovering the money and those are enforcement methods. Some examples include instructing bailiffs, charging orders, attachment of earnings, Third Party Debt Orders.

Experian - One of the three major credit reporting agencies.

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F

Fixed Assets -  Tangible and intangible assets with a relatively long life, acquired to produce goods or services and not intended for resale. Includes financial assets such as trade investments.

Fixed Charge -  A charge over a specific asset or type of asset.

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G

Grace Period - The period allowed to avoid any finance charges by paying off the balance in full before the due date.

Guarantee - A written promise by one person to carry out the contractual commitments of another in the event of default. 

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H

Home Equity Loan - A loan based on the difference of the amount you own on your home, and the home's current market value.

Holding Company - A company formed for the purpose of exercising financial control over a number of operating companies by buying up all or the majority of their shares. A company has a controlling interest in another when it has acquired over 50% of its issued shares which have voting rights. It also has control over the composition of the board of directors of the subsidiary company.

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I

Insolvency -  An inability to pay debts as they fall due, or where a debtor's total assets are exceeded by his or her liabilities. The law in this area is regulated by the Insolvency Act 1986. To be declared insolvent, debts due to a creditor or creditors should be in excess of £750.

Indemnity - A promise to compensate another for a wrongdoing, expense or loss incurred. To be distinguished from a guarantee which relates to the obligations of another and may not be a primary obligation.

Interest - The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.

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J

Judgment -  The official court decision of an action or suit. This public record may be listed on your credit report in matters of money and debts owed.

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L

Liquidation - The winding up of a company, usually by reason of an inability to pay its debts, regulated by the Insolvency Act 1986. The realisation of the company’s assets and the distribution of any proceeds to its creditors.

Liquidator - Insolvency practitioner appointed to wind up and settle affairs of a company being wound-up.

Liquidity - Excess of liquid assets over liquid liabilities.

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M

Mortgage -  A loan agreement or claim against property given by the buyer to the lender as security for money borrowed.

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N

Net income / net loss - Profit (or loss) after tax less extraordinary items.

Nominal Capital - The amount of money that can be put into a Limited or Unlimited company in the form of shares.

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P

Profit (loss) - Profit is the excess of income over expenses. The loss is the excess of expenses over income.

Principal -  The outstanding balance of a loan, exclusive of interest and other charges.

Public Record - Information obtained by the Credit Reporting Agency from court records, such as liens, bankruptcy filings and judgements. Public records are open to any person who requests to see them.

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R

Repossession -  Forced, or voluntary surrender of merchandise as a result of the customer's failure to pay as promised. There are several types and descriptions of repossession actions.

Registered Office -  Company address at which all documents must be served.  This address is recorded at Companies House.

Security - Collateral provided by a debtor to support his or her promise to pay. A creditor may require certain rights over valuable property to lend or supply. Security is used to satisfy a creditor in the event of default.

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Smart Card - An electronic prepaid cash card, usually sold at banks and are exchanged at face value.

T

Technically Insolvent - Company has deficit shareholder funds but has positive working capital or long-term borrowings allowing it to continue trading.

Third Party Debt Order -  Legal proceeding to recover money owed to the debtor by a third party.

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U

Unsecured Creditor -  Creditor with no security for the debt and, therefore ranks with other unsecured creditors on equal basis.  Not given any preference in the event of a liquidation or bankruptcy.

Undischarged Bankrupt - Person not granted formal permission to resume business dealings. Undischarged bankrupt people cannot seek credit over the sum of £50 without disclosing the 'bankrupt' position to the potential creditor.  Cannot become a director of a company or engage in business under another name.

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W

Winding Up Order - Official court order that a company be wound-up and liquidator appointed.

Winding Up Petition - A petition presented to Court if a person or company thinks that a company should be wound-up and be entered into compulsory liquidation. 

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