If you’re struggling with debt, get independent guidance from a charity or non-profit organisation.
Dealing with your money troubles can feel overwhelming, but debt advisors can help you see your options clearly, help you put things in perspective and support you to plan your path for the future. So the sooner you act the better.
Contact a charity or non-profit
Contact a charity or non-profit organisation, like StepChange, for guidance. If you use a fee-paying company, you’ll be paying for their advice on top of your debt repayments. This’ll mean your debt takes longer to clear.
You can use the StepChange debt remedy tool, which is anonymous, takes 20 minutes and will recommend the best debt solution for you. Alternatively, call StepChange 0800 138 1111 (Mon-Fri 8am-8pm, Sat 8am-4pm), or talk to someone in your local Citizens Advice office.
Trust in your debt advisorThe charity or non-profit will assign you a debt advisor who can provide you with impartial information and advice. They won’t judge and what you tell them is strictly confidential. Once your advisor understands your situation, they’ll talk you through your options.
TIP: Use a charity or non-profit for guidance so you're not paying debt-advice fees on top of your repayments.
Find the debt management solution that works for you
There are many types of debt management solutions that could help you solve your debt problems. But it’s important you get independent advice on what type is right for you. Here are some examples.
Debt management plan. This is an informally negotiated agreement between you and your creditors. If you’re struggling to pay your arrears, a debt management plan could help you reduce your monthly payments to an amount you can manage.
Debt relief order. A debt relief order (DRO) is a way to have your debts written off if you have a relatively low level of debt (£1,000 or less) and have few assets (property and possessions). In the UK, a DRO is a simpler, cheaper alternative to bankruptcy.
Individual voluntary arrangement. An individual voluntary arrangement (IVA) is a formal debt solution to pay back debts over a period of time. It’s a formal, legal debt solution approved by the court that your creditors have to stick to. An IVA is a form of insolvency, but it’s different to bankruptcy.
Bankruptcy. Bankruptcy is a legal status that usually lasts for a year and affects your credit history for six years. When you’re bankrupt, your non-essential assets and excess income are used to pay off your creditors. At the end of the bankruptcy period, most of your debts are cancelled. Going bankrupt is one option for clearing your debts and making a fresh start, but it can have serious consequences.
TIP: If you work in banking, entering a debt management solution could count against you. So check your contract, or speak to your line manager or to someone in HR.
Check your contract
If your career is in banking, you might be worried that entering into a debt management solution could prove a red mark against you, or even cost you your job. This may be true if you’re working in a regulated role, in which case it’s worth checking your contract, or speaking to your line manager or someone in HR.