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Getting out of Debt – Who can help?

25th October 2023

By Ben Walker

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If you have built up quite a lot of debt, and are struggling to think of how to get out of it, there could be options that can help you. The best solution for you depends on a few factors. These can include:

  • The type of debts you have
  • Total amount of debt
  • How much money you can afford to pay towards the debts

Whether or not you have enough money to pay off the debts, there are still options that could help give you time to figure out your finances.


A very simple answer that could help you take steps towards getting out of debt is budgeting. By controlling your spending, and only buying what you need, you could be able to save enough money monthly to pay your debts. For more information on budgeting, go to the Budgeting section of this guide.

Talk it out

If budgeting and changing your spending habits isn’t going to be enough to help you, the first step you should take is to actually talk to your creditors. If you are upfront and honest about your situation, you may be able to work something out. Sometimes, creditors will work with you to figure out a solution that allows you to pay off your debts with different terms. 

But, even if you have already agreed a new plan with your creditors, you should still check to see if any debt solutions may help you. It never hurts to see if you can save money.

If you don’t feel comfortable or able to talk to your creditors, or they won’t agree to a new offer, check out other debt solutions as soon as possible. Watch out – going in to an arrangement might wreck your credit score for some time – so will debt management

Breathing Space

If you aren’t ready or can’t afford to use a solution for getting out of debt, you still have options. The government-back scheme called Breathing Space could allow you the time to work your finances out. If you qualify for this scheme, you’ll have 60 days where your creditors won’t be able to add interest or charges to your debt. They also won’t be able to contact you or take action against you to make you pay.

While this scheme covers most debts, it’s important to talk to an advisor just to make sure your debts are covered.To find a free debt advisor, click here.

Mental Health Crisis Treatment

If you are receiving crisis treatment, you may be able to get breathing space from your creditors for the entire duration of your treatment, plus 30 days. Crisis treatment can include things like getting emergency mental health care in a hospital or community.

You should speak to your mental healthcare provider about mental health crisis treatment breathing space.

How much can you afford to pay

Before you start exploring the different debt solutions, there’s some information you need to gather. 

First, collect all the information you have about your debts.

Secondly, find out which debts you have to pay first (priority debts).

Thirdly, see if you can increase your income to help pay your debts.

Finally, check to see if you can reduce your costs.

If you don’t have the money to pay your debts, it may be possible for you to make an alternative arrangement with your creditors. You need to make sure you focus on your priority debts first, and attempt to find an agreement with those creditors. If you can’t find a deal, then pay what you can, but this may not stop them from taking action against you. 

If you still have money after paying your priority creditors, but not enough to clear your debt, you may be able to take steps towards paying off the rest of your debts. This could include:

  • Setting up a Debt Management Plan (DMP) – You can do this by either setting it up with your creditors yourself, or by using an external company.
  • Administration Orders – This method pays your creditors through the court.
  • Individual Voluntary Agreement (IVA) – you will pay your debts through an insolvency practitioner.

Debt Consolidation Loans

Debt consolidation is essentially using credit from a specialist provider to merge all of your existing debts into one larger debt with one provider. 

While debt consolidation isn’t the best option for everyone, there are a few reasons why it could help you get better control over your debt. Firstly, it could help you simplify your debts by only having to make a payment to one creditor. This makes your debts much easier to keep track of and manage. Additionally, you may be able to find a lender that offers you a lower interest rate than the rate you are currently paying. The third main reason is normally debt consolidation loan providers would require a lower monthly payment when compared with the total payments you are currently making. This may make the debt more manageable over the short term. 

But, bear in mind that debt consolidation may not be right for everyone. There are other options available that might suit your circumstances better.

What to watch out for

Often, debt consolidation loan providers describe their product as the perfect solution. However, this is not always the case. When you take out a debt consolidation loan, you may be paying lower interest rates, but the chances are this will come at the cost of a much longer term. This means that you will be paying this debt off for a longer period of time. Also, while most debt consolidation loans are advertised as “manageable monthly payments”, these payments may still be too much for you. If you cannot afford these payments, you will end up in more debt, and so a debt consolidation loan may not be best for you. 

Could you get a Debt Management Plan

Debt Management is when you have an agreement with your creditors to pay off your debt over a set period of time. It is possible to set up a debt management plan yourself, or get in touch with a provider who can manage it for you. Remember, if you take on the responsibility yourself, you will have to sort out your budget to find how much you can afford, get in touch with your creditors and work out the details yourself.

A DMP provider is an independent company that you pay one amount monthly. In turn, the DMP provider deals with your creditors and pays your debts. How long your DMP lasts depends on how much debt you have, as well as how much you can afford to pay each month.

Additionally, you can change your DMP at any time. For example, if you start to earn more income, you can increase how much you pay each month. Alternatively, if you decide a DMP isn’t the best way for you to pay your debts, you can cancel at any time. However, you’ll have to contact your creditors to arrange a new payment plan.

Regardless of how much debt you have, you should be able to get a DMP. If you are able to pay priority loans, but are struggling with other debts, and can contribute at least £5 a month, you should be able to get a DMP.

Is a DMP right for you

There are a few important aspects you need to consider before you get one. 

  1. They don’t normally include priority debts such as rent or council tax.
  2. If you make small payments it can take a very long time to pay off debts.
  3. Creditors can stop accepting money at any time, it isn’t a legally binding agreement.
  4. Your creditors don’t have to agree to the plan in the first place.
  5. Creditors can still contact you about the existing debts you have.
  6. A DMP could make it harder for you to borrow at some point in the future.
  7. Some DMP companies charge fees.

How to get a DMP

It’s important to remember that you can get a DMP for free. If you pay for a DMP, the management fee will be taken out of your monthly payments. This means less money goes to your creditors, and so it takes you longer to pay your debts.

When choosing a DMP provider, make sure it is regulated by the Financial Conduct Authority (FCA). To find out if it is, go to the FCA website.

Administration Orders

An Administration Order (AO) may be able to help you if you have unpaid county court or high court judgement. This would mean you would be paying your debts off in one monthly payment to the courts. The court will then deal with your creditors.

The court decides how much money you will have to pay. Creditors can object to the amount, but the court has the final decision.

You may be able to get an AO if you owe less than £5,000, have more than one debt and have a county court or high court judgement that is unpaid.

Would an Administration Order be right for you

An AO may not always be the right solution for you. When you’re considering an AO, remember, it may take a long time to pay off the debt. The court may limit this to 3 years, but that is dependent on your circumstances.

Additionally, while you don’t have to pay any upfront fees, 10% of your monthly payment will be taken by the court. This will be to cover court costs.

It may make it more difficult for you to borrow money in the future.

If you have debts relating to rent or a mortgage, you could still be evicted from your home if you have an AO.

Getting an Administration Order

First, you have to fill in a N92 form. Make sure you are clear on your debts as you are filling it in. You can either download and print the form, or get a form from your local country office.

Remember, DO NOT sign the form at home. You must sign it in front of a court officer.

When you are submitting the form, include information such as proof of the debts, proof of expenses, proof of income and a copy of court judgements.

Could you get an Individual Voluntary Arrangement

An Individual Voluntary Agreement (IVA) normally allows you to pay off your debts using one monthly payment. This usually takes around 5 years. An IVA is set up by a specialist called an insolvency practitioner. Normally, they are an accountant or solicitor who deals with your creditors for you.

There are fees for getting an IVA, and these fees vary, but are usually much higher than other debt solutions. The fee is added to your monthly payment. When you get an IVA, make sure you know exactly how much you have to pay the insolvency practitioner.

But, to get an IVA, not all of your creditors have to agree. Creditors that are owed at least 75% of the debt have to agree. While the IVA is in place, your creditors cannot contact you or take any action against you.

An IVA may suit you if, firstly, you have more than one debt and more than one creditor. Secondly, if you owe more than £10,000. Thirdly, you should have a regular, steady income. Finally, you should be able to pay at least £100 a month towards the debt. If you don’t fulfil these criteria, an IVA may not be right for you.

Is an IVA right for you

While IVAs can be useful, they may not be the right debt solution for you.

IVAs can cost around £5,000. The extra costs will then be added to your monthly payment, which may decrease how much you can afford to pay to your creditors.

Also, towards the end of the IVA, you may have to remortgage your home. This is to get a lump sum of money to put into the IVA.

If you aren’t able to keep up with the IVA payments, there is a chance you could be made bankrupt.

If you have any savings or pension set aside, you may have to use these to help pay the IVA.

It may not cover debts such as student loans or child maintenance debts. But, IVAs do cover most debts.

You may find it harder to borrow money while you have the IVA. This includes borrowing such as mortgages.

How to get an IVA

As getting an IVA can have a massive impact on your life, it’s important to get professional advice first. If you still think getting an IVA is the right course of action for you, next you need to find an insolvency practitioner. You can’t set an IVA up on your own, so this specialist can help you set it up, and deal with your creditors.

To find an insolvency practitioner near you, go to the Government website.

What if you don’t have enough money to pay your creditors

If you don’t have enough money to pay off your debts, there are still options that you could be eligible for. You may be able to get a Debt Relief Order, or apply for bankruptcy.

Debt Relief Order

A Debt Relief Order (DRO) means that you would have a 12 month period where you don’t have to make any payments towards your debts. At the end of the 12 months, you will no longer owe anything on these debts. But this only applies to debts that are included in the DRO. During this 12 month period, your creditors won’t be able to ask you to pay your debts that are included, or take action against you.

You have to fulfil some criteria to apply for a DRO. You may be able to get a DRO if you:

  • Don’t own your own home
  • Have less than £75 a month after living expenses
  • Owe £30,000 or less
  • Have £2,000 or less in assets and savings
  • Haven’t had a DRO within the last 6 years
  • Have lived in Wales or England for the last 3 years

If you own a vehicle that is worth less than £2,000, you do not have to declare it as an asset. If the vehicle is worth more than £2,000, but has been modified for if you have a disability, you don’t have to declare it. You can only exclude 1 car from your assets.

If you have ignored creditors within the last two years, or only given payments to one, you may find it difficult to get a DRO. You may also struggle if you have given away assets, or sold items for a lower value than they’re worth. 

Should you try to get a DRO

When you are trying to get a DRO, it’s important to remember a few facts:

  1. It costs £90 to apply. If your application is refused, you will not get this back.
  2. It won’t cover all of your debts. Debts including student loans, child maintenance debts, court fines and debt caused by fraud aren’t covered.
  3. If you don’t meet the criteria, or refuse to supply extra information, your application could be refused.
  4. If your rent arrears are in a DRO, you can’t be forced to pay, but your landlord could still try to evict you.
  5. You may struggle to borrow money in the future.
  6. If you want to borrow more than £500 in the 12 month period, you have to inform your creditor.
  7. You aren’t able to set up, or become a director of, a company without the court’s permission.

If your situation improves while you have the DRO, it may be dropped. Scenarios that could cause this could be an increase in income, or a payment. However, you won’t get the application fee back.

How to get a DRO

You can’t apply for a DRO yourself. Instead, you need to apply through an Authorised Debt adviser. They are called approved intermediaries. They will help you gather the information you need to apply for the DRO. They should also:

  • Make sure you meet the criteria for a DRO
  • Explain the impacts of a DRO to you
  • Tell you what responsibilities you would have
  • Apply for the DRO for you

You can find a DRO adviser through approved organisations. Click here to find an approved organisation.


If your debt is worth more than the assets you own, you may be able to apply for bankruptcy. The bankruptcy period usually lasts for 12 months, during which most of your creditors won’t be able to get in touch with you.

To make sure you know if bankruptcy is the right course of action for you, find out:

  1. What you have to pay
  2. What debts would be covered
  3. How it will affect the rest of your life, for example with bills, homes and items
  4. How you managed your debts previously


It costs £680 to apply for bankruptcy. You are able to pay in instalments, but you have to pay the whole £680 before you actually apply for bankruptcy. 

If you aren’t able to get the full amount to apply, there are charities and grants that may be able to help.

If you have a small amount of monthly income, you may be asked to make payments to your debts. This won’t be the case if your income is only from benefits, or if you have no spare money after paying for your living expenses.

Which debts are covered

Not all debts, such as child maintenance debts and student loans covered by bankruptcy. Make sure you know exactly which debts will be covered.

How will it affect you

When you go bankrupt, there is a chance it could affect many other aspects of your life. These can include your home, your belongings, your bills and money and in some cases even your job.

How you dealt with your debts previously

After you are bankrupt, someone called an official receiver will go through your previous debts to check a few details. These include whether you:

  • Paid some debts before others
  • Spent or borrowed more money than you should have
  • Lied to a lender to get credit

But, even if you have done these things, you can still go bankrupt. However, some restrictions may be imposed on you for longer periods of time.

Credit Card Debt

If you have large amounts of credit card debt, you may be able to transfer this debt to a new card that has a 0% interest rate for a fixed period of time. Some card providers offer up to 30 month periods of 0% interest, which may give you time to reduce your credit card debt, or maybe pay it off all together. This is because all of your payments will go towards reducing the debt, rather than paying the interest and then reducing the debt.

For example, you have £2000 of debt on credit cards that are charging 19.9% APR. If you make monthly payments of £70 towards it, it will take you 40 months to pay off, and you will have to pay £732.77 more in interest. So, the total cost of this debt would be £2732.77.

But, you could move this £2000 debt onto a card charging 0% APR, and still make £70 monthly payments. If you did this, you could pay the debt off in 29 months, while paying 0 extra interest. So, in this scenario, transferring the debt to a 0% interest card could save you £732.77, while allowing you to pay the debt off quicker.

Having lots of debt is a scary situation to be in. But, there are systems in place that should be able to help people with many different situations. The most important thing you can do is to talk to an adviser. They will be able to talk you through what you can do, and what steps you need to take. The sooner you can figure out a plan that works for you, the sooner you can start to return to normal and build for the future.

Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.

More than 50% of borrowers receive offers better than our representative examples

The %APR rate you will be offered is dependent on your personal circumstances.

Mortgages and Remortgages

Representative example

Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66

Secured / Second Charge Loans

Representative example

Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20

Unsecured Loans

Representative example

Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.



Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774
Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG

Authorised and regulated by the Financial Conduct Authority – Number 681423
The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages


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