Understanding and managing debt
Clear, practical guidance to help you make sense of what you owe, prioritise the right debts, and take confident steps towards getting back on track.
Debt is a normal part of modern life for millions of people in the UK. Most adults have some form of debt — whether it is a mortgage, a credit card, a student loan or an overdraft. Debt only becomes a problem when you cannot keep up with the repayments, or when the amount you owe grows faster than your ability to pay it back.
The good news is that debt problems are solvable. The sooner you face them, the more options you will have. This page explains the key concepts you need to understand and the first steps to take.
Types of debt explained
Unsecured debt
Debts not tied to an asset — credit cards, personal loans, overdrafts, store cards and catalogues. Creditors can take court action but cannot repossess your home without a charging order.
Secured debt
Debts tied to an asset, typically your home. Mortgages and secured loans fall into this category. Falling behind on payments puts the asset at risk of repossession.
Priority debts
Debts with serious consequences for non-payment — rent or mortgage arrears, council tax, utility bills, court fines and child maintenance. These should always be dealt with first.
Non-priority debts
Debts where the consequences of non-payment are less immediate — credit cards, personal loans, overdrafts, water arrears and catalogues. Still important, but dealt with after priority debts.
Your first four steps
Open all your post
Do not ignore letters from creditors. Knowing exactly what you owe is the first step towards dealing with it.
List everything you owe
Write down each debt, the creditor, the balance, the monthly payment and whether it is a priority debt.
Create a budget
Work out your monthly income and essential spending to see what you can realistically afford to repay.
Get free advice
Contact a free debt adviser at StepChange, Citizens Advice or National Debtline for guidance tailored to your situation.
Key debt concepts
Arrears
Arrears are payments that are overdue. If you have missed one or more payments on a debt — whether it is your mortgage, rent, council tax or credit card — you are said to be "in arrears". The longer arrears go unpaid, the more serious the situation becomes, so it is important to address them early.
Credit cards and overdrafts
Credit cards and overdrafts are forms of revolving credit. They allow you to borrow flexibly, but the interest rates are often high, which means debt can grow quickly if you only make minimum payments. If you are struggling, prioritise essential bills first, then seek advice on dealing with these unsecured debts.
Interest and charges
Interest is the cost of borrowing money. Most debts accrue interest over time, and some also have charges for late or missed payments. If you are in financial difficulty, some creditors may agree to freeze interest and charges temporarily while you work out a repayment plan — a free debt adviser can help you request this.
This page provides general information only. It is not personalised financial or legal advice. Your situation is unique — please seek guidance from a qualified, FCA-authorised debt adviser before making decisions about your debts.
Related guides
How to Deal with Debt: A Practical Starting Guide
A calm, step-by-step guide to facing debt problems in the UK — from taking stock of what you owe to finding the right help.
How to Make a Debt Budget: A Step-by-Step Guide
Learn how to build a simple, realistic budget that helps you understand what you can afford to pay towards your debts each month.
What to Do If You Cannot Pay Your Debts
Practical steps to take if you have no money to pay your debts — from prioritising essential bills to seeking free advice and formal solutions.
How to Deal with Creditors: Communication and Negotiation
Practical advice on communicating with creditors, negotiating affordable repayments, and understanding your rights when dealing with the companies you owe.
Debt Collection in the UK: What You Need to Know
Understand how debt collection works in the UK, what debt collectors can and cannot do, and how to protect yourself if you are being chased for a debt.
Debt Management Plan (DMP)
A Debt Management Plan is an informal arrangement to repay unsecured debts at a monthly rate you can afford. Learn how DMPs work, who they suit and what to consider.
Individual Voluntary Arrangement (IVA)
An IVA is a legally binding agreement to repay a portion of your debts over a fixed period. Understand how IVAs work, eligibility, costs and consequences.
Bankruptcy
Bankruptcy is a legal process that writes off most debts when you cannot repay them. Understand how bankruptcy works in the UK, the consequences and alternatives.
Debt Relief Order (DRO)
A Debt Relief Order is a formal solution for people with low income, low debt and few assets. Learn how DROs work, eligibility criteria and what happens to your debts.
Administration Order
An Administration Order is a court-based arrangement for people with multiple debts and a county court judgment. Learn how it works, eligibility and alternatives.
Breathing Space (Debt Respite Scheme)
Breathing Space is a government scheme giving you legal protection from creditor action for up to 60 days while you get debt advice. Learn how it works and who qualifies.
Debt Consolidation
Debt consolidation combines multiple debts into a single loan or payment. Understand the pros and cons, when it makes sense and when to avoid it.
You do not have to face debt alone
Free, independent debt advice is available right now from trusted UK organisations. Speaking to a trained adviser is the first step towards getting back on track.