Complete Guide to Managing Debt in the UK

Debt can feel overwhelming, but there are always options. This guide helps you understand and manage your situation.

Understanding Your Debt

Types of Debt

Type	Examples
Secured	Mortgage, secured loan (tied to asset)
Unsecured	Credit cards, personal loans, overdrafts
Priority	Rent, council tax, utilities
Non-priority	Credit cards, catalogues, most loans

Priority vs Non-Priority

Priority Debts (Pay First)	Why Priority
Rent/mortgage	Lose your home
Council tax	Can lead to prison
Gas/electricity	Disconnection
Child maintenance	Court enforcement
Court fines	Prison possible
TV Licence	Criminal offence
Income tax/VAT	HMRC has strong powers

Non-Priority Debts	Consequence if Unpaid
Credit cards	CCJ, default, damage credit
Personal loans	CCJ, default
Overdrafts	CCJ, default
Catalogues	CCJ, default
Mobile phone contracts	CCJ, default
Payday loans	CCJ, default

First Steps if Struggling

Immediate Actions

Step	Action
1	Stop panicking — help exists
2	List all debts (who, how much, minimum payment)
3	Work out your budget
4	Identify priority debts
5	Contact creditors
6	Get free debt advice

Contacting Creditors

What to Say	Tips
“I’m struggling to pay”	Be honest
“Can we arrange reduced payments?”	Ask directly
“I’m seeking debt advice”	Shows responsibility
Keep records	Of all contact
Get agreements in writing	Protect yourself

Free Debt Advice

Organisation	Contact
StepChange	stepchange.org
National Debtline	nationaldebtline.org
Citizens Advice	citizensadvice.org.uk
Money Helper	moneyhelper.org.uk

Never pay for debt advice — free services are excellent.

Debt Solutions Explained

Overview

Solution	Debts Written Off?	Duration	Impact
Informal arrangements	No	Varies	Minimal
Debt Management Plan	No	Until paid	Moderate
Debt Relief Order	Yes	12 months	Significant
IVA	Yes (remainder)	5-6 years	Significant
Bankruptcy	Yes	12 months	Severe

Informal Arrangements

What	Details
Reduced payments	Agree with creditors
Payment holidays	Temporary break
Token payments	£1/month while sorting
Interest freeze	Ask creditor

Debt Management Plan (DMP)

Feature	Details
What	Informal agreement to repay
Payments	Single monthly payment distributed to creditors
Fees	Free through charities
Duration	Until debts paid in full
Credit impact	Negative (payments reduced)

Debt Relief Order (DRO)

Feature	Details
Debts up to	£30,000
Savings up to	£2,000
Disposable income	Under £75/month
Cost	£90
Duration	12 months
Result	Debts written off

Individual Voluntary Arrangement (IVA)

Feature	Details
What	Formal agreement with creditors
Duration	Usually 5-6 years
Payments	Affordable monthly amount
At end	Remaining debt written off
Credit impact	6 years
Home	Usually protected

Full guide: IVA vs Bankruptcy

Bankruptcy

Feature	Details
What	Legal insolvency
Cost	£680
Duration	Usually 12 months
Assets	May be sold
Debts	Written off
Credit impact	6 years

Full guide: IVA vs Bankruptcy

Which Solution?

Situation	Consider
Can afford reduced payments	DMP
Low income, few assets, <£30k debt	DRO
Steady income, want to protect home	IVA
Overwhelmed, quick solution needed	Bankruptcy
Minor difficulties	Informal arrangements

Improving Your Credit Score

After Debt Problems

Strategy	Details
Time	Negatives drop off after 6 years
Rebuild slowly	Small credit, paid on time
Check errors	Dispute mistakes
Electoral roll	Register at address
Stable address	Helps score

Full guide: How to Improve Your Credit Score

Dealing with Creditors

Your Rights

Right	Details
Fair treatment	FCA rules protect you
No harassment	Time limits on contact
Breathing space	60-day protection scheme
Accurate information	On credit file
Complain	To Financial Ombudsman

Breathing Space

Feature	Details
What	Legal protection from creditors
Duration	60 days (or longer if in mental health crisis treatment)
Effect	Interest frozen, enforcement paused
Access	Through debt adviser

If Bailiffs Threaten

Know	Your Rights
Most debts	Bailiffs can’t force entry
Exceptions	Council tax, some court fines
Peaceful entry	They can return if let in once
Can’t take	Essential items, children’s things, work tools
Vulnerable	Extra protections apply

Specific Debt Types

Overdrafts

Issue	Solution
Stuck in overdraft	Formal plan to clear
Buffer removed	Negotiate with bank
Fees mounting	Ask for freeze

Guidance: Overdraft Guide

Credit Cards

Strategy	Benefit
Pay more than minimum	Clear faster
Balance transfer	Lower interest
Negotiate rate	Ask for reduction
If struggling	Contact issuer

Student Loans

Key Facts	Details
Plan 2 threshold	£27,295
Rate	9% above threshold
Written off	30 years from graduation
Not like other debt	Income-contingent

Tax Debts

HMRC	Options
Time to Pay	Negotiate instalments
Early contact	Better outcome
Penalties	May be reduced
Can’t pay	Still contact them

Related Guides

Debt Solutions

Topic	Guide
IVA vs Bankruptcy	Full comparison
Credit Score	How to improve
Overdrafts	Managing overdrafts

Credit Products

Topic	Guide
Credit Cards	Guides in credit-cards section
Balance Transfers	How to use them

If Things Go Wrong

Situation	Help
Bailiffs	Know your rights
CCJ	What to do
Harassment	Report to FCA

Summary: Debt Action Plan

If You’re Struggling

Step	Action	Done
1	List all debts	☐
2	Identify priority debts	☐
3	Work out budget	☐
4	Contact creditors	☐
5	Get free advice	☐
6	Choose right solution	☐

Priority Debt Checklist

Debt	Amount	Arrears	Contacted?
Rent/mortgage	£	£	☐
Council tax	£	£	☐
Gas/electric	£	£	☐
Other priority	£	£	☐

Key Contacts

Help	Contact
StepChange	0800 138 1111
National Debtline	0808 808 4000
Citizens Advice	citizensadvice.org.uk
Money Helper	0800 138 7777

Remember

Key Point	Details
You’re not alone	Millions have debt problems
Help exists	Free, expert, non-judgmental
Options available	Always a way forward
Don’t ignore	Problems get worse
Don’t pay for advice	Free services are best

Debt problems are stressful but solvable. The most important step is reaching out for help — free debt charities have helped millions of people find a way through. Whatever your situation, there’s a solution that can work for you.