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Debt Problems

What to do & where to get help

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Wendy and Amy | Edited by Helen S

Updated June 2018

No debt problems are unsolvable. It might not be easy or quick, but there's always a route. And the earlier you deal with ‘em, the easier they are to deal with.

Debt isn't just a finance issue. It feeds into all elements of your life. So solutions are wide and varied; from cutting interest costs, budgeting, or simply getting free one-on-one debt help.

Are you in debt crisis?

There are two ways to deal with problem debt. Which one is right for you depends on whether you're in what's technically defined as debt crisis, or if you just have worrying or large debts.

What counts as debt crisis depends on who you ask. There's a strong indication if you answer yes to either of these...

Are you struggling to pay all basic outgoings, eg, mortgage, rent, energy bills and credit card minimums?

- or -

Are your debts (excluding your mortgage) bigger than a year’s after-tax income?

Even if your debts are big: if you can service them, even at the minimum level, you're not in debt crisis and a different solution applies.

Quick questions

What do I do if I'm in debt crisis?

What do I do if I've got debt problems but I'm not in debt crisis?

Are you hiding your debts?

Do you have physical or mental health / relationship problems?

Being chased for debt that's not yours or is over six years old?

Before you start

No one ever wants to get into debt. It comes from spending money you don't have. This could be for frivolous reasons, or you may've had a horrible change in circumstances, like a partner dying, personal illness, divorce, mental health problems or losing your job (see the full Redundancy Guide for hints and tips if you have lost your job).

Yet however good or bad your reason, from now on it's irrelevant. The most important thing you can do is get a disciplined handle on your spending.

Debt's a symptom, not the problem. Before tackling it, you must reduce your spending. Not only to stop you borrowing more, but to maximise repayments.

The prime aim of this guide is to cut the cost of your debts, yet if you do that without examining the bigger picture of all your spending it'll be wasted (there are some top tips later on to help).

That's why, in this guide, my prime focus is on cutting the cost of your debts themselves, rather than looking at the bigger picture of all spending.

How bad are your debts?

If you're wondering how bad your debts are, as the old adage says, size isn't everything. What counts is your debt in proportion to your ability to repay.

Are your non-mortgage debts bigger than a year's after-tax salary?

If your non-mortgage debts (usually credit cards and loans) are more than a year's salary after tax, then they're quite severe. After all, that means you'd need to work more than a year to repay them, even if you had no outgoings.

Yet even if your debt is manageable, if you don't know where it came from, that's a big danger signal. Compare these two answers:

So how did you build up debts of this size?

"Well I planned for and budgeted, shopped around to get the cheapest borrowing in order to buy a car/conservatory/caravan and now we're repaying it."

...and compare that with:

So how did you build up debts of this size?

"Well I'm not sure really, I just used my credit card and the cost built up."

The latter is, of course, the most worrying. It means you are spending more than you earn and using borrowing as a means to fill the gap.

If you continue to do that, you'll get in a debt spiral.

How the cycle of debt works

#debtmyths tweets via StepChange

Never borrow more

Traditional debt help says 'never borrow your way out of a debt problem'. But this ignores the varying cost of different debts.

The MoneySaving approach is: "Never borrow more to get out of a debt problem."

If it’s possible to borrow more cheaply elsewhere to replace existing borrowing, then this can provide a huge boost, as lower interest rates mean more of your cash goes towards repaying the actual debt rather than just servicing the interest.

Those with big debts may save £1,000/year in interest by being more savvy with their borrowing.

The debt problems checklist

The idea of the checklist is simple: to explore every option and use each one that works for you.

Most link to more detailed guides focusing on those subjects. Once you've found something that works, don't stop. Continue down the list to see if there's anything else that will help.

Some of the suggestions only work for those with a decent credit history and not too severe debts, but it's still worth checking.

The first step... sort your spending

The following are a few ways to manage your cash and reduce your outgoings that are specifically useful for those with debt problems. If you've time, it's far better to go through the full Money Makeover guide.

  • Budget and reduce outgoings

    If you have debt problems, then doing a budget is central. You have to get a handle on what you spend to future-proof your finances. The big problem with most budgets though, is... they don't work. To help, there's a special free budget planner which counters all the traditional budgeting problems.

    Full info: Free Budget Planner and the Stop Spending guide.

  • Earn under £73k? Check your benefits

    Any family with income under £73,000 may be entitled to some form of benefit. You can do a quick check-up for free in just five minutes.

    Full info: Benefit Checkup

  • Can you get help paying the mortgage?

    There's a Government scheme specifically to help mortgage holders who are struggling to make monthly repayments. The scheme pays the interest (and only the interest) on your mortgage up to certain thresholds. There's also information on repossession and rent arrears.

    Full info: Mortgage Arrears.

  • Reclaim, reclaim, reclaim

    If you have, or have had a loan, then it's crucial to check whether you were mis-sold payment protection insurance, which could've cost you 1,000s, to see if you can get the cash back.

    For those in debt, it's very likely some of it has been made up of fees and charges. If you've incurred bank or credit card charges for going beyond your limits, you may be able to get the cash back.

    It's also possible you may be in one of 400,000 homes in the UK paying too much for your council tax.

Cut the costs of all your debt

Now the aim is simple. Repay the debt as quickly as possible, while being charged the lowest possible interest rate.

  • Check credit reference files (for free - or get PAID)

    Before you start, it's worth ensuring your ability to get new cheap credit isn't being hampered by duff data on your credit files. This can cause rejections, but worse still, if you keep applying before it's corrected, even once the problem is fixed you can then be rejected because of all the applications. It's possible to check your files for free though.

    Full info: Credit Report

  • Shift debts to a cheaper credit card
    Suitable for: Mid to high credit scorers

    Used correctly and with discipline, credit cards are the cheapest borrowing possible, especially when shifting debt to new ‘balance transfer' offers. It's possible to get long-term balance transfer borrowing on a credit card for 0%. Even if you don't have a great credit score there are still attainable deals.

    Full info: Best Balance Transfer Credit Cards

  • Cut credit card costs without new credit
    Suitable for: Low-mid to high credit scorers

    New credit isn't always necessary to cut credit card costs. Many credit cards allow existing customers to move other debts to them at special rates. Doing this in the correct order can create substantial savings - using this technique, one man's annual interest was cut from £1,400 to £400 a year.

    Full info: Credit Card Shuffle

  • Check for grants and support

    Some utility companies offer help if you have large arrears on your gas, electricity or water bills. You'll need to be a customer of the company, so if yours isn't listed contact it to see if it has a similar scheme.

    Gas & Electricity: Schemes are offered by British Gas Energy Trust, EDF Energy Trust, E.on CaringEnergy Fund, Npower Energy Fund, Scottish Power Energy People Trust.

    Water: The Consumer Council for Water website has info on all the water company schemes.

    Related info: Details of other grants available in the Low Income Grants guide.

  • Get a cheap personal loan

    Standard personal loans can give you a consistent cheap debt, and for larger amounts are competitive with the cheapest credit cards. The fixed repayments also provide structure for those who tend to let credit card debt linger.

    Unfortunately, those with poor credit scores won't usually get decent rates. An alternative is to look at joining a credit union. For many they’re a welcome alternative to payday loans or doorstep lending.

    Credit unions are independently-run local co-operatives which aim to assist people who may not have access to financial products and services elsewhere. There are 500 in the UK providing loans, savings and current accounts, each deciding its own services and rules on who can join.

    Full info: Cheap Loans, Credit Unions. Related info: Cut The Cost Of Existing Loans

  • Always use savings to repay debt

    The interest paid on savings is usually far less than interest charged on borrowing, so paying off debts with any savings is a serious boon.

    The reason this is after the main debt switching steps is that you should first try to cut the cost of your debts where you can. Then use what savings you have to pay off as much as you can - but focusing on the remaining high interest rate debts.

    Thinking "surely I need my emergency cash fund"? Actually, that's old-fashioned logic. Read the guide linked below for a full explanation of why.

    Full info: Repay Debts with Savings?

  • Danger credit card minimum repayments

    The amount you repay on cards is also crucial. Minimum repayments are designed to keep you locked in for years. Make only the minimum on a standard high street card with £3,000 on it, and it'll take you 27 years to repay and cost you almost £4,000. Yet it's easy to turn this around, even if you can't afford to pay more.

    Full info: Minimum Repayments includes a special calculator.

  • Remortgage: Shift debts to a cheap deal
    Suitable for: Low-mid to high credit scorers

    It's worth stating that a mortgage is just a loan secured on your home. If you can't pay it back, the lender can take your house. It's due to this additional security that it can offer a cheap rate over the long term.

    Cheap deals are available, especially if you've a decent amount of equity in your home. Yet it's worth working HARD to find the best deal for you.

    An obvious idea is to shift credit card and other loan debts onto your mortgage if it's cheaper. On the surface this looks like a no-brainer. The debt is cheap, and as it's over a long time the amount you pay each month will be lower.

    But it's not quite that simple. Technically you are shifting unsecured debt to secured debt, so there's an increased risk of losing your home if you can't repay.

    Plus it may increase your life assurance and other associated mortgage costs. And it may not actually be cheaper. Paying off over a longer period means you end up paying more interest, eg, 5% over 20 years is much more expensive than 10% over five years. New affordability checks has also made it more difficult to increase mortgage debt so this may not be an option for you.

    Don't be totally put off though, if the other routes above haven't worked. It's still worth considering and doing the numbers, especially if you've a flexible mortgage so you can pay the debts off more quickly.

    Full info: Remortgage Guide, Free Mortgage Guide

Dealing with problem debts

If you can't cut the cost of the debts, or if after doing that you're still struggling, it's time to consider some more severe measures.

  • Talk to your lender

    It's very important to get on top of debts as soon as possible. Don't default or miss payments. Let your lender know if you’re going to be unable to pay; it's always better to talk to it. Of course, preventative measures such as reducing interest, expenditure, and being a smart consumer are the best form of action.

  • Can you get help from the Government?

    There are a few ways which may be able to provide you with interest-free borrowing rather than getting any commercial debt.

    Local council support schemes: Since April 2013, each local authority has been responsible for providing help to residents struggling with an emergency. This could include you or your family's health being at risk, not being able to afford to buy food, needing help to stay in your own home and coming out of care, hospital or prison.

    Sadly this is a postcode lottery, each council can choose whether to offer financial help or not or who is eligible. For example, some may give furniture or food grants while others may give cash. Contact your local council or just Google "" to find out its procedure.

    Budgeting loans and advances: This is a Government scheme providing interest free loans to those on certain income-based benefits if you need essential items for your home or other things that you cannot pay for in a lump sum, such as clothes and furnishings.

    Apply for one via the Jobcentre or via the form on If you have means to get money any other way (using savings, for example), you won't qualify. You could get as much as £812 lent (if you have children - it's less if you don't), and repayments are dependent on what you can afford to pay.

    Sadly, demand is extremely high at the moment and there isn't a bottomless pot of money. If the Jobcentre decides your circumstances aren't urgent or you're not struggling, you may not get anything. But if you think you qualify and really need the cash, it's definitely worth a shot.

    If you weren't able to get get this help check to see if there are other grants available in the Low Income Grants guide.

  • Have you been rate-jacked?

    Many card providers have written to their customers saying their APRs will increase by up to 10%. This is the growing phenomena of 'rate-jacking'. Under-publicised rules can be deployed to stop rate-jackers in their tracks - these include an absolute right to reject rate rises for existing debts. If you've had a letter you have several options on how to fight back.

    Full info: Reject Credit Card Rate Hikes

  • Carefully check secured loans
    Suitable for: Very poor to poor credit scorers, but be careful

    Secured or 'consolidation' loans are something to beware of. We've campaigned against many elements of them, and they can be dangerous. They are, at best, a loan of last resort and if you fail to repay it you can lose your home. Plus, unlike personal loans, the rate is variable, so it may sound cheap at the start, but soon they can push it up.

    However, in a few, very limited circumstances, they're a good solution. If you've got expensive debts and some (not too substantial) credit history problems, you may be able to cut their interest rate this way.

    Full info: Cheapest Secured Loans

  • Sale and rent back
    Suitable for: Very poor to poor credit scorers, but be careful

    This is where you sell your house to a company, but then are allowed to continue living there paying rent. It seems an attractive option for some but it's nowhere near as good as it sounds for many people.

    You could only get 50% of your home's value, the rental agreement mightn't be secure and there's even a risk that the person you sell the house to may have it repossessed themselves. Consider with care.

  • Is an IVA or DRO right for you?

    If you’ve seen the adverts on TV, you’d be forgiven for thinking that an individual voluntary arrangement (IVA) is the answer to all debt worries. The promise of a scheme that can write off 75-90% of your debt is not to be taken lightly.

    An IVA is a serious financial arrangement and is only suitable for a small number of people. If you are in debt crisis, read the guide to find out if it could be the right thing for you. It's also worth talking it through with one of the debt counselling agencies.

    Since April 2009, a new type of insolvency (of which IVAs and bankrupcy are another) called a debt relief order (DRO), has been available. It's specifically aimed at those with debts of less than £20,000 who do not own a house (or have any other assets totalling over £1,000, such as savings).

    To get a DRO you need to go via an approved intermediary, such as StepChange Debt Charity or many Citizens Advice bureaux. See their contact details in the free debt counselling section.

    Full info: Formal Debt Solutions Forum Info: Debt Relief Orders

  • Free debt counselling

    If you've exhausted all the options above, check the not-for-profit Money A&E website for further ideas. If things are no better, even if you're not in debt crisis, at this point it's worth talking to one of the debt counselling agencies below.

Debt counselling: Get free one-on-one help

For those in debt crisis (see debt crisis definition) who are consistently struggling with debts and meeting repayments, free personal help is invaluable. Though if you'd like to see roughly where you stand before you start, try our DIY options below.

The right people to go to...


The aim is to find non-profit debt counselling help. In other words, a one-to-one session with someone paid to help you, not to make money out of you. Be careful not to confuse this with ‘free help’: many commercial companies say they’re free as you’re not charged directly, but you’ll still pay somehow.

Stop debt collectors harrassing you for 30 days

These non-profit agencies are also the ideal people to go to if you're being harassed and bullied for payments by debt collection agencies.

An agreement between the Government and Credit Services Association, the body that represents debt collecting agents (see its Code of Practice), gives new power that guarantees debt collectors won't contact you for at least 30 days, provided you've sought debt help or can show you are trying to repay your debts using a self-help tool.

The debt counselling service will inform collectors, which will then give you a month's breathing space to get yourself on a better footing.

The places we'd suggest contacting:

Christians Against Poverty

Debt counselling agency, which specialises in helping those who are emotionally struggling too. The religious focus is why they do it, not how they do it.

Citizens Advice

Full debt and consumer advice service. Many bureaux have specialist caseworkers to deal with any type of debt, including repossessions and negotiation with creditors.

Civil Legal Advice

Legal advice on a small range of issues, including debt where your home is at risk. Recent funding cuts have restricted who can get this, but a handy checker tells you if you're eligible.

  • Link: Legal Aid Checker
  • Tel: 0345 345 4345
  • Opening times: Mon - Fri 9am - 8pm, Sat 9am - 12.30pm
StepChange Debt Charity

A full debt help service in available across the UK. Online support is also available via its Debt Remedy tool and vulnerable people (due to age, mental health or capacity) are able to get extra help support via the free advocacy service.

  • Link: StepChange Debt Charity
  • Tel: 0800 138 1111 (also free from mobiles)
  • Opening Times: Mon - Fri 8am to 8pm, Sat 8am to 4pm
Debt Advice Foundation

A debt advice and education charity offering one-to-one advice.

Debt Support Trust

The Debt Support Trust is a not-for-profit debt advice charity covering England, Wales, Scotland or Northern Ireland via its phone, email or online debt analyser tool.

National Debtline

National Debtline provides free advice and resources to help people deal with their debts. Advice is available over the phone, online and via webchat.

  • Link: National Debtline
  • Tel: 0808 808 4000
  • Opening Times: Mon - Fri 9am to 8pm, Sat 9.30am to 1pm
Business Debtline

Business Debtline provides free advice and resources to help people deal with their finances and debts, both business and personal. Their service is available over the phone, online and via webchat.

Northern Irish residents

A confidential and independent scheme in Northern Ireland is Citizens Advice NI. This Government-funded service offers face-to-face advice in 29 locations.

  • Link: To use webchat service: Citizens Advice NI
  • Tel: 028 9023 1120 (or email
  • Opening times: various

Free debt advice and solutions for those in financial difficulty. Note that PayPlan is a for profit company, although the advice is free.

  • Link: Payplan
  • Tel: 0800 280 2816 (free from mobiles too)
  • Opening Times: Mon - Fri 8am to 9pm, Sat 9am to 3pm
Local agencies

There may be a local debt help agency in your area. If so check it is not-for-profit or a charity, before signing up.

Community Money Advice: has a map of local face-to-face debt advice - see if there's one in your area. Link: Community Money Advice

Money Advice Service: its Debt Advice Locator helps you search for a debt advice service near you. Link: Debt Advice Locator

Yellow Pages / Local council: Try looking in your local Yellow Pages or asking your council if it knows of local advice centres.

What they do to help

These counsellors use a variety of techniques, such as:

They will certainly show you how to prioritise the most important debts to enable you to keep food on the table and a roof over your head.

I know many people are nervous about going or calling up, but they're not judgmental. They're not there to tell you off, just to help you sort out the problem. Talking to them may help you sleep at night.

Unfortunately, the counselling services can be oversubscribed. If it takes time to get an appointment with them, use the information on their websites to start to plan.

The wrong people to go to...


Avoid any debt help or loan consolidation companies that advertise on the telly or in some newspapers. Their job is to make money out of you, plain and simple.

While in the short term their plans will make your payments lower, in the long run it'll cost you dear. Avoid them. Don't touch them. Don’t go near them.

This post from the forum explains it better than we ever could:

We, my wife and I, are on a seven-year plan with StepChange Debt Charity having recently changed from a commercial debt management company after hearing Martin on Radio 2's Jeremy Vine show.

The simple action of swapping to StepChange Debt Charity has shaved over two years off the length of our plan as the money we were paying the management company now goes to our creditors instead!

Of course, that also means a financial saving of nearly eight grand over the term of the original plan's 10-year period.

This includes IVAs and debt-wiping companies. While they sound good, they're only for a few people. If either is for you, the debt counselling agencies should suggest it.

If you’ve used a debt management provider that’s now gone out of business check the Money Advice Service website for what to do if your debt management plan has stopped.

DIY online debt crisis plans

A variety of info and help is available online to help manage your debt problems, or so you check out your options before contacting one of the debt agencies above.

Step 1. Do a detailed budget

Step 2. Online debt help tools

Step 3: Ask the experts a question

Become a Debt-Free Wannabe

One important thing to remember about debt is you're not alone. Among the wider group of MoneySavers, this site has a specific community of people in various level of debt (from bankrupts to limited credit card overspending) all working together and supporting each other to get debt-free.

For support and encouragement and to post your S.O.A. (statement of affairs) to let others who are also in debt and have been through many similar issues pick through your finances, visit the Debt-Free Wannabe board (though for specific questions about this article itself click this link).

It’s completely free and you can be anonymous

While it is necessary to register and pick your user name, only itself will have access to your email - and the only reason this is needed is to stop people spamming the site. Be assured though you will never be contacted, sold anything, and your email will never be passed on.

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