How to get help with debt

Recent research by national debt charity, CAP, has revealed that 4.7 million people (9% of UK adults) regularly use mainly credit to pay monthly bills in 2024 and 50% of UK adults report that repaying debt has a negative impact on them. Many people borrow money regularly and pay it back as planned, but sometimes things can get in the way of that, or circumstances can change, and it can mean that borrowing and debt can start to get out of control.

Debt can cast a shadow over every aspect of your life, sometimes affecting your mental wellbeing, relationships and future financial stability. Whether it’s looming credit card bills, mounting loans or unexpected expenses, debt can sometimes be simply overwhelming, leaving individuals feeling trapped and unsure of the next steps.
 
However, it’s important to remember that owing money is a solvable problem, with a number of ways to seek professional guidance and regain financial confidence. In this article, we’ll explore how to get help with debt and introduce some of the common ways of preventing debt from building up in the future.
 
Jump to:
Understanding your debt
Getting support with debt
Debt service advice
Paying off your debt
Maintaining financial health

Understanding your debt

Understanding your debt is the first crucial step to take to effectively manage and overcome this financial challenge. In other words, it’s important to start the process by clarifying:

• Who is your debt with?
• How much do you owe?
• What are the terms of your debt?

There’s a whole range of creditors and loan companies in the UK, each offering different conditions to their borrowers. Therefore, it’s essential to understand the terms of your debt, such as repayment conditions, interest rates, and additional fees, to get a clearer picture of your situation and prioritise your repayment plan accordingly. 

Some of the common types of debt include:

• Credit cards
• Unpaid bills
• Rent or mortgage arrears 
• Council tax arrears
• Personal loans
• Payday loans
• Car leasing
• Overdrafts
• Court debts and fines
• Buy now, pay later deals

While it’s very common to take advantage of deals and credit offers to cover occasional expenses and spread the cost of larger purchases, heavily relying on these promotions, especially if using them to pay for essentials and regular living expenses, can easily lead to overspending and financial instability.  
 
Understanding how your debt has got to this point can also help you take back control of your finances in the future. 

Getting support with debt

As previously mentioned, there’s a whole range of debt and credit helping us cover lifetime investments, such as getting an education or buying a car or home. However, if the debts are getting unmanageable, they can feel like a heavy burden on our financial stability and overall wellbeing.
 
So, when is the right time to get support with debt? These are some of the scenarios indicating you might need professional support with debt. If you are:

• Consistently worrying about money and struggling to make regular payments on time
• Relying on overdraft and credit cards or other borrowing to get through the month
• Using one form of debt to pay off another
• Hiding your spending habits from your family or friends
• Receiving collection cards or notices
• Ignoring letters and calls from your creditors 

When it comes to managing debts, it’s always better to be proactive and seek help from a professional. Whether you’re struggling to understand the terms and conditions of your debt, or simply seeking financial guidance, debt advisors and counsellors can provide clarity on complex financial matters and help you to deal with the debt in a manageable way. This can put you on a path to start achieving long-term financial wellbeing.

Debt service advice

At Places for People, we offer personalised support if you’re concerned about debt or your financial situation and can point you in the right direction for specialist debt advice from services working across the UK. 
 
There are various resources and services designed to help you regain control over your financial situation. Usually known as debt advice services, these organisations offer free, confidential advice to individuals struggling with debt.

While providing expert guidance on managing debt, these services can also negotiate with creditors on your behalf and help you explore debt relief options to find the best way forward in your specific circumstances.
 
These a number of UK-based organisations providing free debt advice, including:

• National Debtline
• Citizens Advice
• PayPlan
• Community Money Advice
• StepChange Debt Charity
• Debt Advice Foundation

Whether you prefer explaining your financial situation online or in person, the majority of debt advice organisations offer a range of communication options, including phone, email, and face-to-face services.

After the initial contact, the organisations typically carry out a detailed assessment of your financial situation to gain a clear understanding of your debts, income expenses and assets. This helps the advisors develop a tailored plan and recommendations to your specific circumstances.

Paying off your debt

Paying off your debt is an important step towards achieving financial freedom and peace of mind, and there are several ways to tackle your debt effectively. After looking closely into your financial situation, a debt service organisation will work with you to develop a suitable repayment plan, enabling you to pay off what you owe while still meeting your regular essential financial obligations.

That’s not to say that taking charge of your debts isn’t challenging and there may be changes you need to make in order to prioritise paying off what you owe. 

These are some of the common approaches to paying off your debt:

Debt Management Plan

A Debt Management Plan (DMP) is an informal, structured agreement between you and your creditors to pay your debts at a rate you can afford. Negotiated with the help of your debt advisor, a DMP offers relief to debtors by allowing them to make regular payments each month to pay off their outstanding bills.
 
However, it’s important to note that DMP can only be used to repay unsecured debts, for example, debts that have not been guaranteed against your property.

Individual Voluntary Arrangement

An Individual Voluntary Arrangement (IVA) is a formal agreement with your creditors to repay your debts fully or partly over a fixed period of time, usually in five to six years.

Giving you more control over your assets than bankruptcy, IVA is a legally binding scheme for individuals with significant debt who are unable to meet their contractual payments.

To set up an IVA plan, you need to find an authorised insolvency practitioner, who will work out what you can afford and how long the IVA lasts. At the end of the arrangement, any remaining debt included in the IVA is typically written off.
 
While paying back your debts, there are usually fees to be paid to the insolvency practitioner for setting up the plan and handling the payments. 

Administration Order

An Administration Order is a formal debt management solution available in the UK for individuals with multiple debts who owe less than £5,000 in total and have at least one County Court Judgment against them.

If eligible for an Administration Order, you’ll make affordable monthly payments to the court, which will then divide the money between your creditors.

One of the key benefits of an Administration Order is that it protects you from creditors taking further legal action or adding additional charges to your debt. However, it’s important to remember that an Administration Order is added to your public record and comes with a responsibility to pay regular court fees.

So, whether your financial situation requires a Debt Management Plan, Individual Voluntary Administration or an Administration order, seeking professional assistance is a key step to get a better understanding of your debt and make informed decisions. 

To protect individuals in a challenging financial situation, the UK Government has also introduced a ‘Breathing Space’ scheme – temporary protection from your creditors while you get debt advice and make a plan.

When signing up for one of the support schemes mentioned above, it’s important to consider that all these options can have a significant impact on your credit file and affect your credit score. After you have paid off all your debts, the record usually stays on your file for another six years, potentially making it more difficult to access credit and borrow money in the future.