Understanding your options when facing financial difficulty is the first step towards regaining control of your financial future and finding a sustainable path forward.
You might be receiving letters, calls or messages from creditors. You might be juggling payments, using credit to cover essentials, or feeling unsure whether your situation is serious enough to ask for help.
The first thing to know is this: there is rarely one single answer that suits everyone.
Different debt solutions work in different ways. Some are informal arrangements with creditors. Others are formal legal processes. The right solution for you depends on your debts, income, living situation, assets, and what you can realistically afford.
This guide explains some of the main debt solutions available, what they may involve, and what to think about before taking the next step.
Debt solutions are not suitable for everyone. Eligibility depends on your personal circumstances, and fees, risks and alternatives should always be explained before you make a decision.
Debt solutions generally fall into two broad groups.
Informal solutions are arrangements made with creditors. They may help you make reduced payments based on what you can afford, but they are not legally binding on all creditors.
Formal solutions are legal processes. They usually come with clearer rules and protections, but they can also have bigger consequences for your credit file, assets, employment, or future borrowing.
Neither type is automatically “better”. What matters is whether the option is suitable for your circumstances.
An Individual Voluntary Arrangement, often called an IVA, is a formal agreement between you and your creditors.
You usually make affordable monthly payments over a fixed period, often five or six years. At the end of the arrangement, any qualifying debt left unpaid may be written off. MoneyHelper describes an IVA as an arrangement that freezes debts and lets you pay them back over a set period, with remaining money owed written off after that period.
An IVA is arranged and supervised by a licensed Insolvency Practitioner. It is usually considered where someone has unsecured debts, regular income, and can afford a monthly contribution after essential living costs.
An IVA may help by combining payments into one monthly amount and giving protection from creditor action once approved. It is a legal arrangement, not a quick fix.
It may help by:
Things to consider include:
GOV.UK says an IVA will appear on your credit file for six years from the date it starts.
A Debt Management Plan, or DMP, is an informal arrangement with creditors.
It may be suitable if you can repay your debts in full, but not at the original monthly payments, you need lower monthly payments and more time.
A DMP usually involves working out what you can afford after essential bills, then making reduced payments to creditors.
Because a DMP is informal, it can be more flexible than a formal insolvency solution. Payments may be adjusted if your circumstances change.
However, creditors do not have to accept a DMP. They also do not have to freeze interest or charges, although some may agree to do so.
A DMP may be worth exploring if your situation is likely to improve, or if you need more time to repay what you owe.
It may take longer than other solutions, depending on how much you owe and what you can afford each month.
Because it is informal:
A Debt Relief Order, or DRO, is a formal solution for people with low income, limited assets, and debts they cannot realistically repay.
A DRO usually lasts 12 months. During that time, creditors included in the DRO cannot usually take action to recover the debts. If your situation has not improved by the end of the DRO period, the qualifying debts are written off.
GOV.UK says you may be eligible for a DRO if you owe less than £50,000 in total, have less than £75 a month spare income, have less than £2,000 worth of assets, and do not own a vehicle worth £4,000 or more and meet other specific criteria.
A DRO can be helpful for people in severe financial difficulty, but it has consequences. It affects your credit file and appears on the Individual Insolvency Register.
It is also not available to everyone. For example, homeowners are not usually eligible.
Bankruptcy is a formal insolvency process for people who cannot repay their debts within a reasonable time.
It can write off many qualifying debts, but it can also have serious consequences. Your assets may be considered, your credit file will be affected, and some jobs or professional roles may be affected.
GOV.UK says people are usually discharged from bankruptcy after 12 months, although this can take longer if someone does not co-operate with the trustee. If you have enough spare income, you may also have to make payments under an income payments agreement for up to three years.
Bankruptcy can be the right option in some circumstances, but it should be considered carefully because of the possible impact on your home, assets, job and future borrowing.
Breathing Space is not a debt solution by itself.
It is a temporary protection scheme that gives you time to get debt advice and consider your options. In England and Wales, Breathing Space can give temporary protection from creditor action for up to 60 days while you work on a plan.
During Breathing Space, most enforcement action and contact from creditors is paused, and most interest and charges are frozen.
This can be helpful if you feel under pressure and need time to understand what to do next.
The right debt solution depends on the full picture, not just how much you owe.
Things that may affect your options include:
This is why it is important not to rush into a solution based only on a headline or online calculator.
A debt solution should be based on what is affordable, sustainable and suitable for you.
Before entering any debt solution, make sure you understand:
You should also be clear on whether the person or organisation you are speaking to is giving regulated debt advice, providing insolvency services, or simply collecting information before passing you to someone else.
If your debts feel difficult to manage, starting with information can make the situation feel less overwhelming.
You do not need to know which debt solution is right before you ask for support. That is what the next conversation is for.
At Debt Movement, we can help you understand which debt options may fit your circumstances. Fees, risks and alternatives will be explained before you make any decision.
Free impartial guidance is also available from MoneyHelper.