If you are falling behind on credit cards, loans or household bills, your first instinct might be that you need a company to sort it out for you. Often you don't. A lot of people clear their debts themselves, and doing it on your own has real advantages: you keep control, you pay no fees, and nothing formal is recorded against you.
It won't work for everyone. If what you owe is simply more than you can repay in a reasonable time, no amount of budgeting will fix that, and a formal solution may be the honest answer. This guide takes you through the do-it-yourself route step by step, and is straight with you about the point at which it stops being the right approach.
The short answer
- Start by listing every debt, the balance, the interest rate and the minimum payment.
- Build a realistic budget so you know exactly what you can afford each month.
- Deal with priority debts first - the ones with the most serious consequences.
- Contact your creditors early and offer a realistic payment. Many will freeze interest.
- Free help is available from StepChange, National Debtline and Citizens Advice - you never need to pay for debt advice.
- If your debts would take more than around five to seven years to clear, look at a formal solution instead.
Step 1: Work out exactly what you owe
Almost everyone underestimates their total debt, usually because a forgotten catalogue account or overdraft slips through. Write down every single thing you owe, including money borrowed from family, and for each one record the balance, the interest rate, the minimum monthly payment and whether you are behind.
If you are not sure what is out there, check your credit file. All three UK credit reference agencies - Experian, Equifax and TransUnion - have to provide your statutory report, and it will show accounts you may have forgotten about. Seeing the full figure in one place is uncomfortable, but you cannot plan around a number you don't know.
Step 2: Build a budget you will actually stick to
A budget here means one thing: working out how much is genuinely left over each month once your essential living costs are covered. That leftover figure is what you have to put towards your debts, and every decision after this follows from it.
Use the free MoneyHelper budget planner rather than doing it on the back of an envelope - it prompts you for the costs people routinely forget, like car maintenance, school expenses and annual insurance. Be honest rather than optimistic. A budget that leaves you nothing for a haircut or a birthday present is a budget you will break within a month, and breaking it is what pushes people back onto the credit card.
Step 3: Sort your debts into priority and non-priority
This is the step most people get wrong, because they pay whoever is shouting loudest. In the UK, debts are ranked not by how aggressively they are chased but by what happens if you don't pay.
Priority debts - deal with these first
These carry the most serious consequences, including losing your home, having your energy supply disconnected, or court action:
- Rent or mortgage arrears, and any secured loans against your home
- Council tax arrears
- Gas and electricity arrears
- Court fines and TV licence
- Income tax, National Insurance and VAT
- Child maintenance
Council tax is the one that catches people out. It escalates quickly - miss instalments and the full year's balance can become due, followed by a liability order and then enforcement agents. It is worth prioritising even though the balance is usually smaller than a credit card.
Non-priority debts
Credit cards, store cards, personal loans, overdrafts, catalogue accounts, payday loans and money owed to friends or family. These creditors can take you to court and ultimately obtain a county court judgment, but they cannot disconnect your gas or take your home. They get what is left after your priority debts are covered.
Step 4: Talk to your creditors before they chase you
Contacting a creditor before you miss a payment puts you in a far stronger position than waiting for the letters to arrive. Explain what has changed, tell them what you can realistically afford from your budget, and offer it. Under Financial Conduct Authority rules, lenders have to treat customers in financial difficulty fairly, and many will freeze interest and charges, accept reduced payments for a period, or move you onto a repayment plan.
Put offers in writing, keep copies, and don't agree to a payment you know you cannot keep up - a broken arrangement is worse than a realistic one. If a creditor refuses to freeze interest and your balance keeps climbing despite you paying, note that down. It is one of the clearest signals that the do-it-yourself route is not going to work.
Breathing Space
If you need time to get your head straight, the government's Breathing Space scheme gives you up to 60 days during which most interest, fees and enforcement action are paused. You cannot apply for it yourself - it has to be arranged through a debt adviser, which is one good reason to speak to one of the free charities. There is a separate, longer version for people receiving mental health crisis treatment. You can read the official detail on GOV.UK.
Step 5: Pick a repayment strategy and stick to it
Once your priority debts are under control and you know your spare monthly figure, pay the minimum on everything and put whatever is left over onto one debt at a time. There are two sensible ways to choose which one:
- Highest interest first. Target the most expensive debt, then move down. This costs you the least overall and clears everything fastest.
- Smallest balance first. Target the smallest debt, clear it, then roll that payment onto the next. It costs slightly more in interest but each account you close gives you visible progress, which is why many people find it easier to keep going.
Either works. The one that fails is switching between them every few months, or spreading your spare money thinly across everything so nothing ever closes.
What to be careful of
- Consolidation loans at a higher rate. Rolling several debts into one payment feels tidy, but if the interest rate is higher or the term much longer you will pay more overall. Compare it honestly - our guide to debt consolidation versus an IVA sets out the trade-offs.
- Borrowing to make minimum payments. Using one credit card to pay another is the clearest sign that the debt has outgrown the income behind it.
- Paying for debt advice. You never need to. StepChange, National Debtline and Citizens Advice are free, and MoneyHelper is government-backed.
- Ignoring court paperwork. A claim form or a liability order does not go away if you don't open it, and the options shrink the longer you leave it.
When clearing your debts yourself stops working
Doing it yourself is the right answer when the sums add up. The test is simple: at the amount you can genuinely afford each month, how long would it take to clear everything? If the answer is under about five years and the balances are going down, keep going.
If any of the following are true, it is worth getting advice on a formal solution rather than grinding on:
- The balances are staying level or rising despite you paying every month
- Creditors have refused to freeze interest
- You are borrowing to cover minimum payments or essential bills
- Enforcement has started - bailiffs, an attachment of earnings, or a county court judgment
- Clearing the debt would take longer than five to seven years
The formal options if you need them
Needing a formal solution is not a failure - it is usually just arithmetic. The main UK routes are:
Debt Management Plan
An informal arrangement where you make one monthly payment that is shared between your creditors. Generally suits unsecured debts over around £2,000 where you can afford a regular payment. Creditors are asked to freeze interest but are not obliged to agree, and you can leave at any time. See what a Debt Management Plan is.
Individual Voluntary Arrangement
A formal, legally binding agreement, typically for unsecured debts over around £7,000 owed to two or more creditors where you can afford around £100 a month. It runs for five or six years, interest and charges are frozen, creditors cannot pursue you, and qualifying debt left at the end is written off. It will affect your credit rating for six years, fees apply and are taken from your monthly payment, and it is not right for everyone. Read the balanced view in IVA pros and cons, or check whether you would qualify.
Debt Relief Order
For people with lower debts, little spare income and few assets, a DRO freezes your debts for 12 months and then writes off those included. There are strict limits on debt, assets and spare income - see what a DRO is and who qualifies.
Bankruptcy
You apply online through GOV.UK. It can be the right answer where there is little prospect of repaying and few assets at risk, though it has consequences for your home, certain professions and your credit file. See bankruptcy explained.
Where to get free help
You should never pay for debt advice. All of these are free and independent:
- MoneyHelper - government-backed guidance and a debt advice locator
- StepChange - free debt advice and managed plans
- National Debtline - free advice by phone and webchat
- Citizens Advice - free local and online help
Common questions
Can I sort out my debts myself without using a company?
Yes. Many people deal with their debts themselves by listing what they owe, building a realistic budget and setting up their own arrangements with creditors. Free charities such as StepChange, National Debtline and Citizens Advice will help you do this at no cost. A company is only needed if you decide a formal solution such as an IVA is right for you.
Which debts should I pay off first?
Pay your priority debts first. These are the ones where the consequences of not paying are most serious - rent or mortgage, council tax, gas and electricity, court fines, TV licence, tax and child maintenance. Non-priority debts such as credit cards, overdrafts and personal loans come after, even if those creditors are the ones chasing you hardest.
Will creditors freeze interest if I ask them to?
They might, but they do not have to. Creditors are more likely to agree if you contact them early, explain your situation and offer a realistic payment backed by a budget. If they refuse, that is often a sign it is worth looking at a formal solution where interest is frozen as part of the arrangement.
What is Breathing Space and how do I get it?
Breathing Space is a government scheme that gives you up to 60 days where most interest, fees and enforcement action are paused while you get advice. You cannot apply directly - you have to apply through a debt adviser, such as one of the free advice charities. There is a separate, longer version for people receiving mental health crisis treatment.
When should I stop trying to clear my debts myself?
If your debts would take longer than about five to seven years to clear at the amount you can genuinely afford, if the balances are going up rather than down, or if you are borrowing to make minimum payments, doing it yourself has probably stopped working. At that point it is worth getting advice on a formal solution.
How IVA Advice Online can help
If you have worked through the steps above and the numbers still don't add up, that is worth knowing rather than worrying about. We will look at your situation, explain which options actually fit and which don't, and be straight with you if dealing with it yourself is still the better route. There is no charge for talking it through and no obligation - get in touch whenever you are ready.