EyeOnKey terms A–Z
Quick definitions in plain English. Meanings and rules can vary by country and provider.
- Assets
- Things of value you own, which may be sold during bankruptcy.
- Bankruptcy
- A legal process that deals with debts you cannot repay. Rules and effects differ by country.
- Chapter 7 / Chapter 13
- The two main US personal bankruptcy types: liquidation and repayment plan.
- Credit file marker
- A bankruptcy or insolvency record on your credit report. It stays for several years, depending on the country.
- Creditor
- Someone you owe money to.
- Debt relief order (DRO)
- A formal option in some countries for people with low income and few assets.
- Discharge
- The point at which most remaining debts are cancelled.
- Exempt assets
- Items you can usually keep, such as basic household goods or tools of your trade.
- Income payments agreement
- An arrangement to pay part of your income towards debts for a set period.
- Individual voluntary arrangement (IVA)
- A formal repayment agreement to settle debts with creditors.
- Insolvency
- When you cannot pay your debts as they fall due.
- Liabilities
- The debts and obligations you owe.
- Moratorium
- A legal pause on creditor action.
- Restrictions
- Limits placed on you during or after bankruptcy, for example on borrowing or being a company director.
- Sequestration
- The Scottish term for bankruptcy.
- Trustee / official receiver
- The person who manages a bankruptcy and your assets.
The basic distinction
Insolvency is the financial state: someone cannot pay what they owe as payments fall due. Bankruptcy is one formal legal process for dealing with that state. Other formal processes exist under different names — consumer proposals, personal insolvency arrangements, debt relief orders — and their availability and rules depend entirely on where you live.
The shared purpose across countries is the same: an orderly, supervised way to deal with unpayable debt that protects people from endless collection while treating creditors fairly. None of these processes is a product you can buy; they are legal procedures with eligibility conditions.
What typically happens
Formal processes generally involve disclosing your full financial situation to an official body or trustee, a period during which your finances are managed or restricted, and treatment of debts that ranges from supervised repayment to discharge of what cannot be paid. Some assets may be sold; some debts — such as certain fines or family obligations — are often excluded.
The duration, cost, asset rules and consequences differ so much between countries that general descriptions can mislead. Anything about your own situation should come from the official insolvency service or a qualified adviser where you live, not from a summary like this one.
How it shows on credit files
Formal insolvency events usually appear on credit files and are among the most heavily weighted negative entries. They are not permanent: files are designed to reflect recent history, and the event's influence fades as it ages and is eventually removed after a statutory period.
After discharge, rebuilding is a matter of time and demonstrated behaviour — small credit used responsibly, payments made on time, and utilisation kept low. The entry remains visible during that rebuilding, which is normal and expected by lenders.
Before considering any formal process
Formal insolvency is a significant step and is usually not the first tool worth examining. Informal repayment plans, negotiated hardship arrangements, and debt management approaches resolve many situations at lower cost and consequence.
Because the choice between informal and formal routes has legal consequences, the advice that matters is local and qualified. Reputable free debt advice services exist in most countries, and official insolvency bodies publish plain-language guides to their own processes.