If debt payments are becoming unaffordable, protect your home, essential bills and day-to-day needs first. List every debt, check which ones carry the most serious consequences, contact the organisations you owe and speak to a free debt adviser before choosing a repayment or insolvency solution.
You do not need to solve everything in one telephone call. The safest first goal is to stop the position getting worse, meet any urgent deadline and replace guesswork with a complete picture of your money.
What does “bad debt” mean for a household?
For a household, “bad debt” usually means borrowing or arrears that are difficult to repay without missing essential costs, using more credit or falling behind elsewhere. It is not a formal legal category and it does not mean that a person is bad with money.
Accountants also use “bad debt” to describe money a business does not expect to recover. This guide instead uses the terms problem debt and unmanageable debt for a personal situation in which payments no longer fit the household budget.
Debt may be becoming unmanageable when you:
- use one credit account to pay another;
- repeatedly miss minimum or contractual payments;
- fall behind with rent, mortgage, Council Tax, rates, energy or court fines;
- have no money for food, travel, medication or other essentials after repayments;
- depend on an overdraft for ordinary living costs every month;
- receive default, court or enforcement notices;
- avoid opening post or answering calls because the situation feels overwhelming; or
- do not know how much you owe or who now owns the accounts.
You can ask for help before a payment is missed. FCA guidance recognises that a customer can be approaching arrears when they tell a regulated firm that they are at risk of missing one or more repayments.
What can you do if you’re struggling financially in the UK?
Start by checking for urgent threats, protecting essential spending and gathering all the facts. Do not send every available pound to the company contacting you most often.
Use this order:
- Deal with immediate danger or deadlines. Read court, housing, energy and enforcement notices and obtain specialist advice promptly.
- Keep essential services and living costs funded. Allow for housing, food, energy, medication, essential travel and other reasonable needs.
- Identify priority debts. Rank debts by the consequence of not paying them, not merely by balance or interest rate.
- Make a complete debt list. Record balances, arrears, normal payments, creditors, reference numbers and legal stages.
- Build a current household budget. Use actual income and realistic expenditure rather than the amount you hope to have.
- Tell creditors about the difficulty. Ask what support is available and avoid promising an unaffordable payment.
- Get free debt advice. Compare every suitable option before entering a formal arrangement or paying a commercial provider.
| Time | Useful action | Why it matters |
|---|---|---|
| Today | Open and date-sort letters; note every deadline | Prevents a court or enforcement step being missed |
| Within 24 hours | Contact a free adviser if housing, court, energy or enforcement action is involved | Urgent cases may need a specific response rather than a normal payment offer |
| Next few days | Complete the debt list and household budget | Shows what is genuinely affordable |
| After the budget | Contact priority providers and other creditors | Gives each organisation relevant, consistent information |
| Before choosing a solution | Obtain a full benefits check and impartial debt advice | Income, assets, location and debt type can change which options fit |
This timetable is a practical guide, not a substitute for a date printed on a notice. A stated legal deadline takes priority.
Which debts should you deal with first?
Deal first with debts whose non-payment can cause the most serious harm. These are commonly called priority debts; they are not necessarily the largest debts or those charging the highest interest.
| Type of debt or bill | Why it may be a priority | First step |
|---|---|---|
| Rent or mortgage arrears | Your home may be at risk | Contact the landlord or lender and seek housing or debt advice |
| Secured borrowing | The secured property may be at risk | Contact the lender and obtain advice before agreeing changes |
| Council Tax or domestic rates | Court and enforcement action may follow | Contact the council or relevant authority |
| Gas and electricity arrears | Collection action and risks to essential supply can follow | Ask the supplier’s support team about affordable arrangements and available help |
| Court fines, tax or child maintenance | Serious legal or enforcement consequences may apply | Contact the court or responsible authority promptly |
| Essential hire purchase or conditional sale | An essential item may be repossessed | Contact the finance provider and obtain advice |
| Credit cards, overdrafts and unsecured personal loans | Defaults, collection and court action are possible, but they normally rank after immediate essential consequences | Assess them after essential and priority commitments |
The correct order depends on your circumstances, the legal stage and the UK nation in which you live. MoneyHelper’s guide to prioritising debts explains common consequences. Ask a free adviser to check the order if several priority debts are involved.
Should you stop paying debts when you cannot afford them?
Do not stop every payment automatically. First protect essential costs, identify priority debts and get advice about the consequences of changing each payment.
Cancelling a Direct Debit prevents that payment method from being used; it does not cancel the debt or contract. Missing payments can lead to arrears, charges, credit-file entries, collection or legal action. However, paying unsecured credit at the expense of rent, energy, food or medication can make the overall situation more dangerous.
If there is no money for a non-priority debt after reasonable essential and priority costs, tell the creditor. A regulated lender may consider reduced or token payments, time to obtain advice, changes to interest or charges, or another form of forbearance according to the individual circumstances. Do not claim that a payment is affordable when your budget says otherwise.
How do you make a complete debt list?
Create one list containing every balance, creditor and deadline, including bills that do not appear on a credit report. A credit report is useful, but it is not a complete debt register.
For each debt, record:
- the original creditor and any current collector or debt purchaser;
- the account or reference number;
- whether the debt is sole, joint or guaranteed;
- the estimated balance and amount in arrears;
- the normal payment and next due date;
- any interest or charges still being added;
- whether the debt is secured, priority or non-priority;
- the latest letter, notice or court stage; and
- whether the balance or liability is disputed.
Use statements, emails, post and verified online accounts. If an unfamiliar collector contacts you, ask who owns the debt and for a breakdown before providing payment details. Do not ignore genuine court documents even when you dispute the balance.
How do you make a budget for debt advice?
Add all reliable household income, then record realistic essential spending and priority commitments. The amount left—if any—is the starting point for considering non-priority debt payments.
Use monthly figures consistently. Convert weekly amounts by multiplying by 52 and dividing by 12, and annual costs by dividing by 12. Include irregular but necessary costs such as school items, prescriptions, car servicing where the vehicle is essential, and replacing basic household goods.
Do not reduce reasonable food, heating or health costs merely to make a creditor offer look better. A sustainable budget is more useful than an optimistic one that fails immediately. Our step-by-step household budgeting guide includes a reusable process for calculating the real monthly position.
If expenditure is higher than income, say so. A deficit budget is a reason to obtain advice urgently, check benefits and other support, and avoid committing to payments that cannot be maintained.
What should you say to a creditor when you are struggling?
Explain what changed, when it changed, what your budget shows and what support you need. Ask the creditor to confirm the effect of any arrangement on interest, charges, the total balance, the agreement term and your credit file.
Keep a record of calls and save written replies. Do not provide a banking password, PIN or one-time security code. Verify unexpected contact using details from the provider’s official website or a statement you trust.
Our guide to negotiating with creditors includes a message template, a worked pro-rata offer and detailed guidance on reduced payments, token payments and full-and-final settlements.
What help can a regulated lender offer?
Support can include time to obtain advice, a changed payment date, reduced or token payments, deferred arrears, a sustainable repayment arrangement, or action on further interest and charges. The appropriate option depends on the product and the customer’s circumstances.
The FCA requires regulated consumer-credit firms to treat customers in or approaching arrears or default with forbearance and due consideration. Its examples include accepting no, reduced or token payments for a reasonable period when normal payments would prevent priority debts or essential living expenses being met. Support is not identical for every customer, and it does not automatically write off the debt.
Before accepting support, ask:
- how much and how often you will pay;
- when the arrangement starts and ends;
- whether interest or charges will continue;
- whether the balance or repayment term will increase;
- how the account will be reported to credit-reference agencies;
- whether collection or legal action will pause; and
- what happens at the review date.
Get the outcome in writing. If the creditor refuses an affordable request, ask why, request a review and speak to a free debt adviser.
Should you borrow more money to pay existing debts?
Usually, do not borrow more until you have compared the full cost, risks and alternatives with an independent adviser. A new loan can move a payment rather than solve an underlying monthly shortfall.
Debt consolidation may reduce the number of payments, but a longer term can increase the total repaid. Turning unsecured debt into borrowing secured on your home puts the home at risk if payments are missed. Using high-cost short-term credit can rapidly increase the problem, and borrowing from an unauthorised lender creates serious safety risks.
Money Trumpet is a credit broker, not a debt-advice service. If existing commitments are already unaffordable, use free debt advice before making another credit application.
How do you get out of debt you cannot afford?
You get out of unaffordable debt by matching the solution to the complete financial position, not by choosing the fastest-sounding product. Some people need only temporary creditor support; others need a managed repayment plan or a formal solution that deals with debts they cannot repay in full.
Begin with a free benefits check, a realistic budget and independent debt advice. GOV.UK lists independent benefits calculators that can indicate possible entitlement, although a result is an estimate rather than a benefit decision. Increasing income can change which debt options are sustainable.
Avoid any company promising a guaranteed write-off or asking for a fee before explaining alternatives, risks and total costs. A solution should address the underlying shortfall and protect reasonable living expenses, not simply delay the next missed payment.
What debt solutions are available in the UK?
Debt solutions range from informal arrangements to formal insolvency procedures. The right option depends on where you live, income, essential spending, assets, home ownership, debt types, total balances and whether your circumstances are likely to improve.
| Route | Broad purpose | Important point |
|---|---|---|
| Direct informal arrangement | Agree temporary or longer-term payments with creditors | Creditors’ agreement and treatment of interest or action must be checked |
| Debt Management Plan | One affordable payment is distributed among eligible non-priority debts | Usually informal; priority and secured debts need separate treatment |
| Individual Voluntary Arrangement | Formal agreement with creditors in England, Wales or Northern Ireland | Eligibility, fees, failure risks and effects on assets and credit require advice |
| Debt Relief Order | Formal relief for eligible people with limited income and assets in England, Wales or Northern Ireland | Rules and thresholds apply; an approved adviser checks eligibility |
| Bankruptcy | Formal insolvency route available under nation-specific rules | Assets, income, occupation, public records and credit can be affected |
| Debt Arrangement Scheme | Scottish statutory repayment programme | Scotland-specific protections and rules apply |
| Protected trust deed or Scottish bankruptcy | Scotland-specific formal debt solutions | Home, assets, income, fees and failure consequences need specialist advice |
Do not select a solution from a short online comparison alone. Formal arrangements can affect assets, banking, employment, public records and access to credit. Some debts cannot be included, and similar-sounding solutions operate differently across the UK.
GOV.UK provides an overview of debt options for England and Wales. Use a free adviser familiar with the rules where you live for a complete comparison.
Is a Debt Management Plan right for you?
A Debt Management Plan may help when you can make a regular affordable payment towards eligible non-priority debts but cannot maintain the contractual amounts. A provider normally distributes one payment among participating creditors.
A DMP is usually informal. Creditors do not necessarily have to agree, freeze interest or stop recovery action, and priority or secured debts generally require separate treatment. Some providers charge fees, while debt charities may arrange plans without a fee.
Ask how long repayment is expected to take, what happens if income changes, whether every creditor has agreed, how fees affect payments and how the plan will appear on your credit file. Compare it with all other suitable options before starting.
Can Breathing Space pause debt action?
In England and Wales, the Debt Respite Scheme may give an eligible person up to 60 days of protection while they receive debt advice and make a plan. For included debts, most creditor contact and enforcement are paused and most interest and charges are frozen.
Breathing Space does not write off the debt, does not cover every liability and does not mean all regular commitments should be ignored. A debt adviser must assess whether it is suitable and start it. A mental-health-crisis breathing space has different eligibility and can last for the qualifying treatment period plus 30 days.
Scotland and Northern Ireland use different debt and moratorium systems. Read the current GOV.UK Breathing Space guidance and obtain nation-specific advice.
What if a debt has been passed to a collector?
Confirm whether the collector owns the debt or acts for another creditor. Ask for the original account, present balance, breakdown and authority to collect before agreeing payment.
A collection agency is not automatically a bailiff, enforcement agent, sheriff officer or court official. Ordinary collectors do not gain court-enforcement powers merely because an account has been transferred. Formal enforcement notices need urgent, jurisdiction-specific advice.
Tell the collector if you are obtaining debt advice and provide the adviser’s details when authorised. Keep communication records and report misleading, oppressive or publicly embarrassing behaviour through the firm’s complaints process. A complaint does not itself pause a court deadline.
What if the debt is old or you do not recognise it?
Do not make a payment or admit liability before checking the account and obtaining advice about the legal position. Ask the organisation to show why it believes you owe the money and how the balance was calculated.
Possible explanations include mistaken identity, identity fraud, a joint or guaranteed account, an old address, or a debt sold under a different company name. Time limits can be affected by the debt type, court action, payments and written acknowledgement.
Our guide to how long a debt can be chased in the UK explains the general limitation and prescription rules. It is not safe to assume that every debt disappears after six years.
What should you do about court papers or enforcement action?
Read the document, confirm the deadline and obtain specialist advice immediately. Do not assume that contacting the creditor informally changes the date by which a court response, application or payment must be made.
Keep the envelope, notice and every attachment. Check the sender through an official channel if authenticity is uncertain, but do not use verification as a reason to miss a short deadline. Tell the adviser about your location, debt type, previous court orders and any vulnerability or accessibility need.
If an enforcement agent, bailiff or sheriff officer contacts you, the powers and procedure depend on the debt and UK jurisdiction. Do not sign an agreement you do not understand. Ask a free adviser about entry rights, protected goods, fees and the correct way to challenge an error.
How will problem debt affect your credit file?
Late payments, arrears, defaults, court judgments and formal debt solutions can affect your credit history. The entry and retention period depend on the event and applicable reporting rules.
Do not sacrifice rent, energy, food or health costs solely to protect a credit score. Stabilising essential finances is more important. Ask creditors and advisers how a proposed arrangement will be reported and check reports from all relevant UK credit-reference agencies for accuracy.
Our guide to what affects your credit score explains common credit-file factors, while the credit repair guide explains how to challenge inaccurate information without paying a company to make unrealistic promises.
How can free debt advice help?
A trained debt adviser can check urgent risks, identify priority debts, review benefits and entitlements, prepare a budget, explain rights and compare every suitable solution. The service is confidential, and reputable free providers do not judge people for how the situation arose.
Start with MoneyHelper’s Debt Advice Locator, which lists free telephone, online and face-to-face services. Other established routes include Citizens Advice, National Debtline and StepChange Debt Charity.
Be cautious of lead-generation websites and commercial firms using charity-like names. Check what the organisation is, whether it charges, what it recommends, how it is regulated and who receives your information before giving personal details.
What information should you take to a debt adviser?
Take enough information to show the full household position, but do not delay urgent contact because one document is missing. An adviser can tell you what to obtain next.
Useful items include:
- proof of income, benefits and household contributions;
- recent bank statements;
- housing, energy, Council Tax or rates and other essential bills;
- statements and letters for every debt;
- court, enforcement, default or termination notices;
- details of assets, savings, vehicles and property;
- employment, health or caring changes affecting the budget; and
- a list of deadlines and questions.
Ask how information will be stored and shared. Use verified upload methods and never provide banking passwords, PINs or security codes.
What can you do if debt feels overwhelming?
Tell the creditor and debt adviser how your health affects communication, decision-making or payment. You can ask for a safer contact method, additional time, accessible information or permission for an authorised person to help.
Opening one letter or making one call can be a meaningful first step. If possible, ask somebody you trust to sit with you while you sort documents or contact an adviser. Do not pay a creditor with money needed for medication, food, warmth or immediate safety simply to end a difficult call.
If you or somebody else is in immediate danger, call 999 or use the appropriate urgent health service. Debt complaints and routine advice channels are not emergency services.
What if you are unemployed and in debt?
After job loss, update the budget immediately, check benefits and tell creditors before making promises based on previous earnings. Redundancy money and savings may need to cover essential costs while income changes, so do not use them selectively without comparing the whole position.
Our guide to dealing with debt while unemployed covers benefit deductions, job-loss budgeting, borrowing risks and the support available when income has stopped or fallen.
Frequently asked questions
How can you clear debt without paying or writing it off?
There is no legitimate method that simply clears a valid debt without repayment, creditor agreement or a formal legal process. Some formal solutions can discharge qualifying debts when their rules are met, and a creditor may occasionally agree a write-off, but neither outcome is automatic. Obtain advice before applying for insolvency or accepting a settlement because assets, income, tax, credit and future obligations can be affected.
What if your partner or family does not know about the debt?
You can obtain confidential debt advice before deciding how to discuss it. Tell the adviser if disclosure could place you at risk, particularly where economic or domestic abuse is involved. Joint debts, shared bills and jointly owned assets may affect another person, so get advice about the specific accounts rather than assuming the problem is entirely separate or entirely shared.
Is it better to pay the smallest debt or the highest-interest debt first?
First deal with essential costs and priority debts according to the consequences of non-payment. After those are stable, the best order for non-priority debts depends on interest, minimum payments, any agreed plan and your objective. A repayment strategy should not override urgent housing, energy, court or tax risks.
Can you get debt help before missing a payment?
Yes. Contact creditors and a free adviser as soon as you expect a payment problem. Early action may create more support options and gives you time to prepare before arrears or a legal deadline develops.
Will creditors freeze interest automatically?
No. A creditor may suspend, reduce, waive or cancel further interest or charges where appropriate, but the response depends on the account and individual circumstances. Ask for the decision and its duration in writing.
Can a creditor refuse an affordable payment offer?
An informal offer is not automatically binding on a creditor. A regulated firm must still consider the customer’s circumstances and provide appropriate forbearance and due consideration. If an offer is rejected, ask for reasons and alternatives and seek free advice rather than increasing it beyond the budget.
Is debt consolidation the same as debt advice?
No. Debt consolidation is new borrowing used to repay other balances; debt advice is an assessment of the whole situation and available options. Consolidation can cost more or put assets at risk, so compare it with non-borrowing solutions first.
Can you deal with debt without paying an advice company?
Yes. Free, confidential debt-advice services can review the full position and may help with budgets, creditor contact and suitable solutions. Check MoneyHelper’s locator before paying a commercial company.
What happens if you ignore debt letters?
The balance, collection stage or legal risk may worsen, and you may lose the chance to respond or obtain support early. Open every letter, verify unfamiliar demands and get help promptly with court or enforcement documents. Responding does not mean agreeing that an unrecognised debt is yours.
Sources and review information
This guide was newly researched and written for Money Trumpet and last reviewed on 13 September 2026. Principal sources were MoneyHelper’s guidance on prioritising debts and its Debt Advice Locator; the FCA’s current rules on customers in or approaching arrears or default; and GOV.UK’s overview of options for dealing with debt and Breathing Space.
Money Trumpet is a credit broker, not a lender or debt-advice service. This article provides general information, not personalised financial, debt, legal or insolvency advice. Debt priorities, court procedures and formal solutions vary across the UK. Use a free qualified adviser for recommendations about your circumstances.