IVA and Debt Solution Glossary

IVA and Debt Glossary: A-Z

Understanding debt solution terminology helps you make informed decisions. This glossary explains common terms you'll encounter.

A

Adjudicator
The official who decides whether to make a bankruptcy order after you apply online.

Affordability
Your ability to make IVA payments based on disposable income after essential expenses.

Annual Review
Yearly check of your income and expenditure during an IVA. May result in payment increases or decreases.

Arrangement to Pay
Status shown on credit file when in an IVA, DMP, or other repayment arrangement.

Assets
Property and possessions you own, including your home, car, savings, and valuables. May be considered in debt solutions.

B

Bankruptcy
Legal process declaring you cannot pay your debts. Results in asset sale but debt write-off after 12 months.

Bankruptcy Order
Official declaration making someone bankrupt, issued by the court or Adjudicator.

Bankruptcy Restrictions Order (BRO)
Additional restrictions (beyond standard 12 months) imposed for serious misconduct. Rare.

Beneficial Interest
Your share of an asset's value, typically in jointly-owned property.

Benefits
State payments like Universal Credit, PIP, ESA. Some acceptable as income for IVAs, others not.

Breach
Breaking IVA terms, such as missing payments or hiding income. Can result in IVA failure.

C

CCJ (County Court Judgment)
Court order requiring debt repayment. Issued if creditor sues and you don't respond or attend.

Charging Order
Court order securing debt against your property. Creditor can force sale if debt unpaid.

Completion Certificate
Document confirming successful IVA completion and debt write-off. Issued by IP.

Consumer Credit Act
Legislation regulating credit agreements and protecting consumers.

Credit File
Record of your credit history held by credit reference agencies. Lenders check before lending.

Credit Reference Agency (CRA)
Company holding credit information. Three main UK agencies: Experian, Equifax, TransUnion.

Credit Score
Numerical rating of your creditworthiness based on credit file data.

Creditor
Person or company you owe money to.

Creditors' Meeting
Virtual meeting where creditors vote on your IVA proposal. Need 75% approval.

D

Debt Management Plan (DMP)
Informal arrangement to repay debts over extended period through reduced monthly payments. Not legally binding.

Debt Relief Order (DRO)
Formal debt solution for those with debts under £30,000, minimal assets, and low income. Lasts 12 months.

Default
Notation on credit file when you miss payments (usually 3-6 months arrears). Stays 6 years.

Discharge
Release from bankruptcy or DRO restrictions after specified period (usually 12 months).

Disbursements
IP's out-of-pocket expenses like property valuations or credit reports. May be charged separately or included.

Disposable Income
Money left after essential expenditure. Used to calculate IVA payment amount.

Distribution
Payments sent by IP to your creditors from your monthly IVA contributions.

E

Electoral Roll
Register of people eligible to vote. Being registered improves credit score.

Equity
Value of your property minus outstanding mortgage. Important factor in IVAs and bankruptcy.

Equity Release
Remortgaging to release property equity. Required in IVA year 5 or extend 12 months.

Essential Expenditure
Necessary costs like housing, utilities, food, transport. Used to calculate disposable income.

Experian
One of three main UK credit reference agencies. Credit score range: 0-999.

F

FCA (Financial Conduct Authority)
Regulates debt advice and financial services in the UK.

Formal Debt Solution
Legally binding arrangement like IVA, DRO, or bankruptcy. Provides creditor protection.

Full and Final Settlement
One-off payment to settle debt for less than full amount. Requires creditor agreement.

G

Guarantor
Person who agrees to repay debt if you cannot. Remains liable even if you enter IVA/bankruptcy.

Guarantor Loan
Loan requiring someone to guarantee repayment. Guarantor pursued if you default.

H

HMRC (HM Revenue & Customs)
Government department collecting taxes. Tax debts can be included in IVAs.

Homeowner
Someone who owns property, either with mortgage or outright. Affects IVA equity release requirements.

HP (Hire Purchase)
Finance agreement where you hire item until final payment. Don't own item until fully paid.

I

IPA (Insolvency Practitioners Association)
Professional body regulating and licensing Insolvency Practitioners.

IPO (Income Payments Order)
Order requiring bankruptcy patients to make payments from surplus income for up to 3 years.

Informal Debt Solution
Non-binding arrangement like DMP. No legal protection but more flexible.

Insolvency
Inability to pay debts as they fall due.

Insolvency Practitioner (IP)
Licensed professional who can administer IVAs and bankruptcies. Must be regulated.

Insolvency Register
Public register of people in IVAs, bankruptcy, or DROs. Searchable online.

Interest
Charges added to debt by creditor. Frozen during IVA/bankruptcy.

IVA (Individual Voluntary Arrangement)
Formal agreement to repay debts over 5-6 years with remainder written off. Requires creditor approval.

J

Joint Debt
Debt owed by two people (e.g., joint loan). Both remain fully liable even if one enters IVA.

Joint IVA
Rare arrangement where partners enter linked IVAs. Complex and uncommon.

L

Liability
Legal responsibility to repay debt.

Lump Sum IVA
IVA settled with one-off payment rather than monthly installments. Requires creditor approval.

M

Means Test
Assessment of income and expenditure to determine affordability for debt solutions.

Modification
Change to IVA terms agreed between you, IP, and creditors. May require creditor approval.

Moratorium
Protection period during bankruptcy when creditors cannot take action.

N

Nominee
Role of IP when setting up IVA proposal. Becomes "supervisor" after approval.

Nominee Fee
Fee for IP setting up IVA. Typically £1,000-£2,000, taken from first payments.

O

Official Receiver (OR)
Government official who manages bankruptcy cases. Part of Insolvency Service.

Overdraft
Credit facility allowing you to borrow from bank account. Unsecured debt included in IVAs.

P

Payment Break
Temporary suspension of IVA payments due to genuine hardship. Requires IP approval.

PIP (Personal Independence Payment)
Disability benefit. Can count as income for IVA purposes.

Priority Debt
Debt with serious consequences if unpaid: mortgage, rent, council tax, utilities, court fines.

Proposal
Formal document detailing your IVA terms, sent to creditors for approval.

Preferential Creditor
Creditor who gets paid before others in insolvency. Mostly abolished but some HMRC debts qualify.

Q

Qualifying Debt
Unsecured debt that can be included in IVA/bankruptcy. Excludes secured debts, fines, student loans.

R

R3
Trade body for insolvency and restructuring professionals. Issues guidance on IVA fees.

Remortgage
Taking new mortgage, often to release equity for IVA in year 5.

Restriction
Limit placed on activities during bankruptcy or IVA, like borrowing over £500.

S

Secured Debt
Debt secured against asset (mortgage on house, HP on car). Cannot be included in IVA.

Set-off
Creditor's right to deduct debt from money they owe you. Common with banks.

Statement of Affairs
Document listing all assets, liabilities, income, and expenditure. Required for bankruptcy.

Supervisor
Role of IP managing your IVA after approval. Takes supervisor fee from payments.

Supervisor Fee
Ongoing fee for IP managing IVA. Typically 15-20% of each monthly payment.

T

Trust Deed (Scottish)
Scottish equivalent of IVA. Similar purpose but different legal framework.

Trustee
Person managing bankruptcy estate and distributing funds to creditors.

U

Undischarged Bankrupt
Someone currently bankrupt (within 12-month period).

Unsecured Debt
Debt not secured against assets: credit cards, personal loans, overdrafts. Can be included in IVAs.

Utilities
Essential services: electricity, gas, water. Bills are priority debts.

V

Variation
Formal change to IVA terms. May require creditor approval depending on nature.

Voluntary
Key aspect of IVA - you voluntarily propose arrangement. Creditors can't force you.

W

Windfall
Unexpected income like inheritance, lottery win, or bonus. Usually must contribute to IVA.

Write-off
Debt legally removed and no longer owed. Occurs after successful IVA, bankruptcy, or DRO completion.

Common Acronyms

  • APR: Annual Percentage Rate (interest rate)
  • ACCA: Association of Chartered Certified Accountants
  • CAB: Citizens Advice Bureau
  • CRA: Credit Reference Agency
  • DAS: Debt Arrangement Scheme (Scottish)
  • DLA: Disability Living Allowance
  • DMP: Debt Management Plan
  • DRO: Debt Relief Order
  • DWP: Department for Work and Pensions
  • ESA: Employment and Support Allowance
  • FCA: Financial Conduct Authority
  • HMRC: HM Revenue & Customs
  • HP: Hire Purchase
  • IPA: 1) Insolvency Practitioners Association 2) Income Payments Agreement
  • IPO: Income Payments Order
  • ICAEW: Institute of Chartered Accountants in England and Wales
  • IP: Insolvency Practitioner
  • IVA: Individual Voluntary Arrangement
  • JSA: Jobseeker's Allowance
  • OR: Official Receiver
  • PCP: Personal Contract Purchase (car finance)
  • PIP: Personal Independence Payment
  • UC: Universal Credit

Quick Reference: IVA Key Terms

Before IVA:

  • Nominee: IP setting up your IVA
  • Proposal: Document sent to creditors
  • Creditors' Meeting: Where creditors vote

During IVA:

  • Supervisor: IP managing your IVA
  • Annual Review: Yearly financial check
  • Modification: Change to IVA terms

End of IVA:

  • Completion Certificate: Proof of successful completion
  • Write-off: Remaining debt legally removed
  • Discharge: IVA ends, obligations complete

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