If you are dealing with debt in the UK, you will likely encounter a wide range of financial and legal terms used by lenders, debt collectors, and credit reference agencies.

This glossary explains more than 100 common UK debt terms in plain English so you can better understand your credit report, lender communications, and available debt solutions.

A

Administration Order
A court order allowing someone with multiple debts and a County Court Judgment to make one monthly payment to the court, which distributes the money to creditors.

Affordability Check
A review carried out by lenders to determine whether a borrower can realistically repay a loan.

Arrears
Money that should have been paid but has been missed.

Arrangement to Pay (AP)
A temporary agreement with a creditor to pay less than the normal monthly payment.

Attachment of Earnings
A court order requiring an employer to deduct money from wages to repay a debt.

B

Balance
The total amount currently owed on an account.

Bankruptcy
A formal insolvency solution where debts are written off but assets may be sold to repay creditors.

Bankruptcy Restriction Order (BRO)
An order that extends bankruptcy restrictions if someone behaved irresponsibly before bankruptcy.

Bailiffs (Enforcement Agents)
Officials authorised to collect certain debts or seize goods after a court order.

Breathing Space Scheme
A government scheme that pauses most creditor action and interest for 60 days while someone seeks debt advice.

C

Charge-Off
When a lender closes an account due to non-payment and records the remaining balance as unpaid.

Charging Order
A court order that secures a debt against a property.

Collection Agency
A company that collects debts on behalf of lenders or after purchasing the debt.

Consumer Credit Act (CCA)
UK legislation regulating credit agreements.

County Court Judgment (CCJ)
A court order stating you must repay a debt.

Credit Agreement
A contract between a borrower and lender outlining repayment terms.

Credit File
A record of your borrowing history held by credit reference agencies.

Credit Limit
The maximum amount that can be borrowed on a credit account.

Credit Reference Agency (CRA)
Companies that hold credit data such as Experian, Equifax, and TransUnion.

Credit Score
A numerical rating used by lenders to assess risk.

Creditor
A company or person you owe money to.

D

Debt Collector
A person or company responsible for recovering unpaid debts.

Debt Collection Agency (DCA)
A company that collects debts either for lenders or after buying them.

Debt Consolidation
Combining multiple debts into a single loan.

Debt Management Plan (DMP)
An informal arrangement to repay debts through reduced monthly payments.

Debt Relief Order (DRO)
A formal insolvency option for people with low income, low assets, and debts below a set threshold.

Debt Settlement
Negotiating with a creditor to pay less than the full balance.

Default
A marker placed on a credit file after serious missed payments.

Default Date
The date a lender records the default on your credit file.

Delinquency
Another term for overdue payments.

E

Early Settlement
Paying off a credit agreement before the end of the term.

Enforcement Action
Legal steps taken to recover unpaid debts.

Equity
The value of property minus any secured loans or mortgages.

F

Financial Conduct Authority (FCA)
The regulator responsible for overseeing financial services in the UK.

Financial Ombudsman Service (FOS)
An independent body that resolves complaints about financial companies.

Final Response Letter
A lender’s formal response to a complaint.

Fixed Interest Rate
An interest rate that does not change during the loan term.

G

Garnishment
A term used outside the UK similar to Attachment of Earnings.

Guarantor Loan
A loan where another person agrees to repay the debt if the borrower cannot.

H

Hard Credit Check
A credit search visible to other lenders that may affect your credit score.

Hire Purchase (HP)
A finance agreement used to buy goods such as cars with monthly payments.

I

Individual Voluntary Arrangement (IVA)
A legally binding agreement to repay part of your debts over typically five years.

Insolvency
When someone cannot pay their debts as they fall due.

Interest Rate
The percentage charged on borrowed money.

J

Joint Debt
A debt shared between two people where both are responsible for repayment.

Judgment Debt
A debt confirmed by a court judgment.

L

Liability Order
A court order often used for unpaid council tax.

Loan Agreement
A contract outlining the terms of borrowing money.

M

Minimum Payment
The lowest amount required each month on a credit card or loan.

Missed Payment Marker
A record on your credit file showing a payment was missed.

Mortgage Arrears
Missed payments on a mortgage.

N

Notice of Default
A letter informing you that your account may soon be defaulted.

Notice of Enforcement
A warning letter sent before bailiffs take action.

O

Outstanding Balance
The remaining amount owed on a credit account.

Overdraft
A facility allowing you to spend more than the balance in your bank account.

P

Payment Holiday
A temporary pause in repayments.

Payment Plan
An agreement to repay debt over time.

Priority Debts
Debts with serious consequences if unpaid, such as rent or council tax.

Proof of Debt
Evidence that a debt exists and is owed.

Q

Qualifying Debt
A debt that can be included in certain insolvency solutions.

R

Repossession
When a lender takes back property after missed payments.

Repayment Plan
An agreed schedule for paying back debt.

Responsible Lending
Rules requiring lenders to check affordability before lending.

S

Secured Debt
A debt backed by an asset, such as a mortgage.

Settlement Offer
An offer to repay a reduced amount to close a debt.

Soft Credit Check
A credit search not visible to lenders.

Statute Barred Debt
A debt that can no longer be enforced through court action due to time limits.

T

Token Payment
A very small payment made when someone cannot afford normal repayments.

TransUnion
One of the three major UK credit reference agencies.

U

Unsecured Debt
Debt not tied to an asset, such as credit cards or personal loans.

V

Variable Interest Rate
An interest rate that can change over time.

Voluntary Termination
Ending a hire purchase or car finance agreement early under certain rights.

W

Write-Off
When a creditor stops pursuing repayment of a debt.

Warrant of Control
A court order allowing bailiffs to seize goods.

Z

Zero Balance
An account where nothing is owed.

Understanding the language used by lenders and debt collectors can make dealing with debt far less confusing. When you know what terms such as default, CCJ, or debt management plan actually mean, it becomes easier to navigate your options and make informed decisions about how to handle your finances.

Whether you are reviewing your credit report or exploring debt solutions, this glossary should help you better understand the terminology used throughout the UK debt system.