Important Definitions

Administration Order

Is a rarely used court order that covers your outstanding debts up to £5,000, where you already have a county court judgment. Under it you would make a monthly payment to the court (typically 10% of your payment as handling fees to cover their costs), who will then distribute that money on a pro rata basis amongst your creditors. Whilst the order is in place no creditor included in the order, without the leave of the court, will be allowed to take action against you. In addition, debt collection procedures and letters against you will be stopped.

Annual Review

A full re-assessment of your current financial circumstances on the anniversary of you commencing your Single Payment Plan or the anniversary of your last full review.

Bankruptcy

Bankruptcy, in law, is defined as the settlement of the liabilities of a person who is unable to meet their financial obligations. Bankruptcy is a formal method of dealing with debts if other options have failed or are inappropriate. The consequences of bankruptcy are severe and no one should make an application for bankruptcy without seeking advice. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most instances, to discharge the debtor from further liability. Bankruptcy proceedings may be voluntary (instituted by the debtor) or involuntary (instituted by creditors).

Cleared Funds

Any payments you make into our Fee or Client Account can be drawn upon. This is irrespective of payment method, for example; direct debit, standing order, cash payment by payment card, debit card, bank giro credit or electronic transfer.

Client Account

The account where any monies held on your behalf, in respect of your monthly Single Payment Plan (SPP) payments, are kept and which cannot be used for any other purpose in EuroDebt's business.

Client Authority Form

These forms are required to be signed by you to give us authority to contact your creditors and to act on your behalf.

Client Financial Planner

A detailed statement of your current financial affairs, listing the sources and amounts of your income and items of expenditure, including Priority Creditors and unsecured creditors. This is used as the basis of calculating what you can reasonably afford to pay to your creditors every month.

Creditor

The organisations that you owe money to that are not Priority Creditors. This means all of the people or businesses you have told EuroDebt that you owe money to and who are included in your Client Financial Planner.

Debt Management Agreement or DMA

The contract terms that govern the Debt Management Services provided to you by EuroDebt. You have the right to withdraw at any time with no penalty. EuroDebt does request two weeks notice to allow proper and professional termination of the agreement with your creditors and to refund any Cleared Funds not disbursed in the Client Account.

Debt Management Company (DMC)

A company licensed under the Consumer Credit Act 1974 that acts as your Debt Manager. A DMC will provide advice on how to restructure debts, alter debt repayments and/or achieve early resettlement of debts. This will normally involve negotiating with creditors and providing you with a facility to make a single monthly payment which is distributed to your creditors.

Debt Management Plan or (DMP)

The DMP, or Single Payment Plan, represents the informal arrangement between you and your creditors whereby EuroDebt administers the reduced monthly payments to your creditors on your behalf. You make one monthly payment and EuroDebt deducts its Monthly Management Fee and any ASU premium, and then distributes the agreed amounts to your creditors on a proportional basis, based upon the amount of debt you owe to each Creditor. Each Creditor will receive at least a minimum payment of £2.00. You will receive a monthly statement and, if you have requested it from your Personal Account Manager, a diary log of correspondence for the previous month. In the first statement you will receive details of the total debt you need to repay, the number of creditors and their expected monthly repayments and the total fees payable to EuroDebt over the estimated duration of the Debt Management Plan.

Debt Relief Order (DRO)

Chapter 4 of the Tribunals Courts and Enforcement Act 2007 introduced Debt Relief Orders in April 2009 as a new form of bankruptcy in England and Wales. A DRO is a simplified, quicker and cheaper alternative to bankruptcy, suitable for debtors living in England and Wales who have few or no assets (less than £300 and not homeowners) and little disposable income (less than £50 per month). It will be possible to apply for a DRO without attending court and the fee is to be £90. The fee may be paid by instalments prior to applying for the Debt Relief Order. The debtor will usually be allowed to keep a car if it is worth less than £1,000 or it has been adapted for them because they have a physical impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities.

Instruction Fee

An initial Fee that is payable by you for setting up the Debt Management Plan and negotiating with your creditors to accept reduced monthly payments and attempt to get interest & charges on your debts frozen either now or in the near future. The Instruction Fee is calculated using a tariff that takes account of the total value of your debt and the number of creditors.

IVA

An IVA is a formal agreement made between a debtor and his creditors about how the debts will be paid (either in full or in part). To enter into an IVA you need to apply to a court and an insolvency practitioner has to be appointed to supervise the arrangement. An IVA is an alternative to bankruptcy.

Monthly Management Fee

A monthly fee for managing your affairs with your listed creditors, providing on-going debt advice, administering payments, issuing statements & correspondence reports, processing correspondence you receive from creditors, dealing with new creditors or agencies when notified and generally acting in your best interests over the duration of the Debt Management Agreement.

Priority Creditors

These regular payments and payment arrears for your; mortgage, rent, council tax and utility bills. You should not ignore any payment arrangements enforced through a court.

Qualifying Debt

The total unsecured debt and the number of creditors listed in your Client Financial Planner.

Scottish Trust Deed

A Trust Deed (more properly a Protected Trust Deed) is the Scottish equivalent of an IVA. It is a formal arrangement that is used in Scotland where a consumer grants a 'deed' in favour of the trustee which transfers their assets to the trustee for the benefit of creditors. It will normally stop legal action and protect you and your home. Provided certain conditions are met, the Trust Deed may be registered as "protected", thereby preventing creditors from petitioning for the debtor's sequestration.

Single Payment Plan (SPP)

EuroDebt's branded Debt Management Plan (DMP).

Other Definitions

• Fee charging Debt Management Companies (DMCs), like EuroDebt, act on behalf of borrowers to help them clear their debts. They do this by entering into direct negotiations with creditors in order to re-negotiate the repayment of debts over a longer timeframe at significantly lower repayment amounts usually with interest & charges frozen early in the lifecycle of the Debt Management Plan. In return for their services the DMC may be paid a set-up fee and on-going monthly management fees by the borrower. EuroDebt charges an Instruction Fee and a monthly management fee once the Single Payment Plan has commenced.
• The borrower is a client of EuroDebt.
• Borrowers typically enter into a Debt Management Plan (DMP), Financial Management Programme (FMP) or Single Payment Plan (SPP) - all have broadly the same meaning.
• DMPs are informal voluntary arrangements, unlike Administration Orders, Individual Voluntary Arrangements (IVAs), Trust Deeds or Bankruptcy.
• The majority of DMCs do not undertake home visits or face-to-face meetings, they deliver their service from Call Centres. EuroDebt is the exception to this.

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