Start with free debt advice
If you are struggling with debt, the safer first step is usually a free debt charity. They review the full picture, explain the options that may fit, and never charge you. They are not selling you a product.
- StepChange: 0800 138 1111 · stepchange.org
- National Debtline: 0808 808 4000 · nationaldebtline.org
- MoneyHelper: 0800 138 7777 · moneyhelper.org.uk
- Citizens Advice: citizensadvice.org.uk
These services are free, confidential and impartial. They do not introduce you to lenders or fee-charging firms.
If you have already started getting calls and letters that feel overwhelming, the Breathing Space scheme (the Debt Respite Scheme in England and Wales) can give you 60 days of legal protection from interest, charges and enforcement while you get advice. A debt adviser arranges it for you.
The debt solutions ladder
Debt solutions vary in how formal they are, how long they last, and what they cost you in credit-file impact or asset risk. Solutions get more formal further down the list. The right one depends on your income, what you owe, what assets you hold and what you can realistically repay.
A free debt charity reviews your situation and explains which options may fit. This guide is an overview, not a recommendation.
1. Budget review
The first step in almost every debt-help conversation is a careful budget review.
A trained debt adviser maps your full income against essential bills, priority debts (rent, mortgage, council tax, fuel, food, court fines, child maintenance, tax), and non-priority debts (most credit cards, personal loans, store cards, overdrafts, BNPL).
The aim is to see what you can actually afford after essential costs, and to make sure priority debts are protected first. Many people find at this stage that small adjustments and a few benefit checks change what is possible. Tools like MoneyHelper’s Benefits Calculator can highlight income you are entitled to but not claiming.
2. Negotiating directly with creditors
If you can pay something, a debt adviser may help you write to non-priority creditors with a token-payment offer or a request for reduced repayments. Creditors are not obliged to accept but often do, especially when they see a clear, evidenced budget.
This can be done independently with templates from National Debtline, but a debt adviser carries more weight and protects you from being talked into agreements that do not suit your situation.
3. Debt Management Plan (DMP)
A DMP is an informal arrangement to repay non-priority debts at a lower monthly amount that you can afford. A free DMP provider (such as StepChange or Payplan) handles the payments and negotiates with creditors on your behalf.
Key points:
- Informal, not legally binding, can be paused or changed
- Interest and charges are usually frozen, though not guaranteed
- Affects your credit file for the duration of the plan and for six years from the date of the last missed or reduced payment
- No upfront fee through a charity; fee-charging providers also exist but take a cut of payments
- Used for non-priority debts. Priority debts are addressed separately.
A DMP suits situations where you can afford something each month but not the full contractual amount, and you expect circumstances to improve over time.
4. Debt Relief Order (DRO)
A DRO is a formal solution for people with low income, low assets and lower-level non-priority debts. It freezes the debts for 12 months. If your circumstances have not improved at the end of the period, the debts are written off.
Eligibility thresholds change over time. As of the most recent updates, broad criteria include a debt cap, an assets cap and a surplus-income cap. A debt adviser confirms whether you meet the current thresholds.
Key points:
- Formal insolvency procedure
- Costs £90 (paid to the Insolvency Service)
- Applied for through an authorised intermediary (most free debt charities qualify)
- 12 months long
- Stays on your credit file for six years
- Restrictions during the 12-month period (cannot borrow more than £500 without disclosing the DRO, restrictions on being a company director)
A DRO suits people whose financial picture is genuinely stuck, low income, no realistic prospect of repaying, and whose debts fall within the eligibility caps.
5. Individual Voluntary Arrangement (IVA)
An IVA is a formal, legally binding arrangement between you and your creditors, usually for six years, to repay an agreed proportion of your debts. Anything left at the end is written off.
Key points:
- Formal insolvency procedure
- Set up by a licensed insolvency practitioner (IP)
- Typically lasts six years (sometimes longer if a payment break is used)
- Affects your credit file for six years
- May require you to release equity from a property in the fifth year
- Failure to keep up with payments can result in the IVA collapsing and bankruptcy being a remaining option
- The IP charges fees, taken from your monthly payments
An IVA suits people with regular income, assets they want to protect (especially homeowners), and debts that are too large to clear through a DMP. The free debt charity StepChange offers IVAs; some fee-charging firms market IVAs heavily, so it is worth getting free advice first to confirm an IVA is the right route at all.
6. Debt consolidation
Debt consolidation is taking out a new loan to repay several existing debts. It is not a debt solution in the same sense as a DMP, DRO or IVA. It is a new credit agreement.
It can help in some situations, for example, if you can afford the new loan, the total cost is lower, and you stop using the credit lines you have just cleared. It can make things worse if the new term is longer, if you continue to add credit, or if you secure previously unsecured debts against your home.
For the full picture see the debt consolidation guide. If a debt charity reviews your situation and consolidation is the right answer, it stays on the table. If a more formal solution fits better, free advice surfaces it before you take on more credit.
7. Bankruptcy
Bankruptcy is a formal insolvency procedure that writes off most unsecured debts. It is usually applied for online through the Insolvency Service, costs £680 in fees, and lasts one year before discharge.
Key points:
- Most unsecured debts are written off at discharge
- A trustee in bankruptcy is appointed and may sell non-essential assets, including a home, to pay creditors
- Stays on your credit file for six years
- Restrictions during the bankruptcy period (cannot be a company director, restrictions on credit and on certain professions)
- A small minority of debts (court fines, child maintenance, student loans) survive bankruptcy
Bankruptcy is a serious step. It may be the right one if debts are far beyond what could realistically be repaid and other formal solutions do not fit. Free debt advice walks through the alternatives first.
8. Scotland: different routes, similar principles
Scotland has its own debt-help framework:
- Debt Arrangement Scheme (DAS): broadly equivalent to a DMP, but legally binding once approved. Freezes interest and charges, protects from enforcement.
- Scottish trust deed: broadly equivalent to an IVA. Formal, four-year typical term, debt write-off at the end.
- Sequestration: Scotland’s equivalent of bankruptcy. Two routes: standard sequestration and the Minimal Asset Process (MAP), which is the Scottish equivalent of a DRO for people on low income with low assets.
- Moratorium: short-term protection from creditor action while you get advice (similar in spirit to Breathing Space).
Citizens Advice Scotland and StepChange Scotland provide free, impartial debt advice.
What free debt advice does and does not do
Free debt charities:
- Review your full income, outgoings and debts
- Explain what each solution would mean in your specific case
- Help you set up the solution that fits, including the formal ones
- Stay with you through the process
- Never charge fees and never introduce you to lenders
They do not:
- Push a particular solution
- Take a cut of your repayments
- Run credit checks against you for marketing
- Tell you what you should do, they explain the options, you decide
Avoiding scams and fee-charging firms
Some firms advertise as if they offer the same service as a free charity but take fees from your monthly payments. They are not always doing anything wrong legally, but you may pay hundreds or thousands of pounds for advice you could have received free.
Warning signs to watch for:
- Cold contact (text, email, online ad) offering to “wipe your debt” or “write off 80%”
- Upfront fees before any service is provided
- Pressure to decide quickly
- Vague company name, no FCA authorisation (check the FCA Register at register.fca.org.uk)
- Refusal to put recommendations in writing
If a firm sounds too eager, take a free-advice call before deciding. StepChange, National Debtline, MoneyHelper and Citizens Advice are the recognised starting points.
Free help
- StepChange: 0800 138 1111 · stepchange.org
- National Debtline: 0808 808 4000 · nationaldebtline.org
- MoneyHelper: 0800 138 7777 · moneyhelper.org.uk
- Citizens Advice: citizensadvice.org.uk
- Citizens Advice Scotland: cas.org.uk
- StepChange Scotland: stepchange.org
All free, confidential and impartial.
Related guides: Debt Consolidation · Bad Credit Loans · Credit Reports and Scores · Getting Financial Advice