Find out about the different ways to deal with debts if you’re falling behind with day-to-day bills, loan and credit card repayments, or other financial commitments (such as your rent or mortgage). It’s important to get free debt advice before you decide.

If you are looking to speak to a free debt adviser within the East Midlands please get in touch (link to Contact Form) or you can use this map (link to map) to locate the organisation closest to you.

For further information on Ways to clear your debt please see the National Debtline factsheet: Ways to clear your debt

Debt Management Plan (DMP)

• Debt Management Plans allow you to pay back your debts at an affordable rate.
• You make one monthly payment to the DMP provider.
• Your DMP provider will help you work out an affordable payment and talk to your creditors.
• Might be possible if you have non-priority debts, such as credit or store cards, overdrafts, and personal loans.

Debt Relief Order (DRO)

• Debt Relief Orders are possible if you’re on a low income with very few assets.
• They freeze debt for a year then write it off completely if your circumstances haven’t changed.

Individual Voluntary Arrangement (IVA)

• It allows you to pay back what you can afford, but you’ll need at least £70 a month spare to pay your creditors.
• It lasts a set amount of time (usually five or six years).
• Anything you haven’t paid off by the end is written off.
• It’s a legally binding agreement – this means when you’ve signed it, there are likely to be harsh penalties for cancelling it.

Bankruptcy

• Writes off all debts that are allowed to be included in a bankruptcy order. Some debts can’t be included, such as social fund loans, student loans, child maintenance arrears or fraudulent debts.
• If you have any assets, they’ll be assessed to see if they can be used to pay off your debts. Usually you’re allowed to keep some assets, such as tools or equipment you need to carry on working. A debt adviser can explain how this will affect you.
• Offer in full or final settlement
• Do you have a lump sum that would cover part of your debts? Then you could ask your creditors whether they would accept a part payment and allow you to write the rest off.
• Or they might allow you to make monthly payments for an agreed period, after which the balance is written off.

Writing off your debts

• Possible in exceptional circumstances if you have no available income, savings, or assets.
• You must be able to show your creditors that your circumstances are unlikely to improve in future – for example, if you’re severely ill.

If you are looking to speak to a free debt adviser within the East Midlands please get in touch.

For further information on Ways to clear your debt please see the National Debtline factsheet: Ways to clear your debt

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