If your debts are building and you can’t pay them off, there are places you can go for help and support.
There are lots of options but choosing the one that is right for you depends on how much you owe and the type of debts you have.
Firstly, you need to figure that out. Once you have an idea, there are a few places you can go for advice.
- 1 Citizens Advice Bureau
- 2 National Debtline
- 3 Money Advice Service
- 4 StepChange Debt Charity
- 5 Debt Advice Foundation
- 6 Do you have to pay for debt advice?
- 7 What options are available if I can’t afford repayments on my debt?
- 8 Debt management plan
- 9 Administration orders
- 10 Individual voluntary arrangements
- 11 Debt relief orders
- 12 Debt Month
Citizens Advice Bureau
You can get face-to-face advice at your nearest centre. They can deal with any type of debt, including repossessions and negotiations with creditors.
You can find your nearest CAB online or telephone 03444 111 444.
This service is completely free and available any time from 9 am until 8 pm Monday to Friday and from 9.30 am to 1 pm on Saturday. You can call 0808 808 4000 or speak to them via webchat on their website.
Money Advice Service
The Money Advice Service was set up by the government to provide free financial support. You can read through the information on their website at any time or contact the helpline from Monday-Friday 0800 138 7777.
They also have a Webchat service open from 8 am to 6 pm Monday to Friday and 8 am to 3 pm on Saturday.
There’s even a WhatsApp service where you can send questions about help sorting your debts, credit issues or pensions guidance. The number is 44 7701 342744.
StepChange Debt Charity
This charity offers support across the UK. You can use their debt remedy tool to get an idea of what could work for you.
They provide advice, budget support and can talk through the solutions to help you deal with debt.
After completing a budget form, you can call them on 0800 138 1111, talk to them on webchat or email them through their online form.
Debt Advice Foundation
Another charity that offers free advice on their helpline 0800 043 40 50 or you can read through some of the information on their website.
Do you have to pay for debt advice?
No, there is free advice available at any of the places above. Private debt management companies who charge a fee may promise to cut your repayments in the short term, but in the long term, you will pay much more.
What options are available if I can’t afford repayments on my debt?
Once you have spoken to someone about your debt problems, there are several options available to you.
They might help you learn how to budget better to continue paying off the debts, or they might offer some advice on some of the things available to you.
These aren’t easy options and will have a big impact on your credit rating so you should think carefully before you consider what you want to do.
Debt management plan
Under a debt management plan, you work with your creditors and agree to pay a small amount each month.
This is done through a debt management company, which must be authorised by the Financial Conduct Authority (FCA).
You need to give information on your financial situation and they can work on a monthly payment you can afford.
The company then contacts your creditors and asks them to agree to the plan, though they don’t have to do and if they do not accept it, you will have to continue paying them back separately.
Every month you make the payment to the company and they then share the money out between your creditors.
This is suitable for people with non-priority debts (debts which will not cause you to lose your home) like credit cards, overdrafts or personal loans.
Administration orders are only available for people who owe under £5,000 and can afford to make regular payments, but crucially you must have at least two debts with one being a County Court Judgement or Higher Court Judgement against you.
You can apply to the County Court for an administration order if you fit those criteria.
if they agree to make the order, you make payments to them and they can then distribute it to your creditors. Once the order is in place, the creditors are not allowed to get in touch with you directly.
Individual voluntary arrangements
An IVA is a legally binding agreement where you and your creditors agree that you will pay all or part of your debts. You make regular payments to an insolvency practitioner and they then divide the money between your creditors.
It allows you to pay back what you can afford over a set amount of time and anything that is not paid off by the end if written off.
Once you have signed an IVA, neither you nor your creditors can back out.
You need to pay a fee to the insolvency practitioner every month, which is usually taken from your monthly payments and you should not have to pay any upfront charges before the arrangement is set up.
Debt relief orders
To qualify for a debt relief order, you must have debts under £20,000 and be able to show you don’t own things of value or have savings over £1,000.
You must also show that you are on a low income with £50 or less spare each month after paying your household bills. You must also have lived, had a property or owned a business in the last three years in England, Wales or Northern Ireland.
Usually, these orders are only granted if it seems unlikely you will ever be able to clear your debts.
If the order is granted, it freezes your debt for debt and then writes it off completely if your circumstances haven’t changed.
You can apply through an intermediary and it costs £90 to arrange the order. You can pay this in instalments over six months but your application won’t be looked at until it is paid in full. A free debt advice service can help you arrange an intermediary.
This article is part of a month-long focus in November all about debt.
Scary word, we know, but we’re hoping if we tackle this head on we’ll be able to reduce the shame around money struggles and help everyone improve their understanding of their finances.
Throughout November we’ll be publishing first-person accounts of debt, features, advice, and explainers. You can read everything from the month on the Debt Month tag.
If you have a story to share, a topic you want us to cover, or a question that needs answering, get in touch at MetroLifestyleTeam@Metro.co.uk.