Best ways to pay off your debts – England and Wales

Find out about the different ways to deal with debts if you’re falling behind with day-to-day bills, loan and credit card repayments, or other financial commitments (such as your rent or mortgage). It’s important to get free debt advice before you decide.

Debt Management Plan (DMP)

  • These allow you to pay back your debts at an affordable rate.
  • You make one monthly payment to the DMP provider.
  • Your DMP provider will help you work out an affordable payment and talk to your creditors.
  • Might be possible if you have non-priority debts, such as credit or store cards, overdrafts and personal loans.
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Debt Relief Order (DRO)

  • These are possible if you’re on a low income with very few assets.
  • They freeze debt for a year then write it off completely if your circumstances haven’t changed.
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Individual Voluntary Arrangement (IVA)

  • It allows you to pay back what you can afford, but you’ll need at least £70 a month spare to pay your creditors.
  • It lasts a set amount of time (usually five or six years).
  • Anything you haven’t paid off by the end is written off.
  • It's a legally binding agreement – this means when you’ve signed it, there are likely to be harsh penalties for cancelling it.

Bankruptcy

  • Writes off all debts that are allowed to be included in a bankruptcy order. Some debts can't be included, such as social fund loans, student loans, child maintenance arrears or fraudulent debts.
  • If you have any assets, they'll be assessed to see if they can be used to pay off your debts. Usually you're allowed to keep some assets, such as tools or equipment you need to carry on working. A debt adviser can explain how this will affect you.
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Offer in full or final settlement

Do you have a lump sum that would cover part of your debts? Then you could ask your creditors whether they would accept a part payment and allow you to write the rest off.

Or they might allow you to make monthly payments for an agreed period, after which the balance is written off.

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Writing off your debts

  • Possible in exceptional circumstances if you have no available income, savings or assets.
  • You must be able to show your creditors that your circumstances are unlikely to improve in future – for example, if you’re severely ill.

Talk to a free debt adviser to find out if this solution could be suitable for you.

Get free debt advice

It’s always best to talk things through with an experienced debt adviser before you decide how you’re going to pay off debts.

This is because the debt solution that’s best for you depends on your personal circumstances.

Debt advisers can help you make the right decisions so most of your money will go to paying off your debts, which means you could be debt free sooner than you thought.

A debt adviser will:

  • treat everything you say in confidence
  • never judge you or make you feel bad about your situation
  • suggest ways of dealing with debts that you might not know about
  • check you’ve applied for all the benefits and entitlements available to you
  • always make sure you’re comfortable with your decision.

Three quarters of people who get debt advice feel more in control of their finances afterwards.

You can find free, high-quality debt advice now using our debt advice locator tool. 

If you’re struggling with debts, Breathing Space could give you valuable time to find a solution. Find out more about Breathing Space and how it can help you.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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