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.
If you are worried about debt, you are not alone. Millions of people in the UK struggle with debt at some point in their lives. The most important thing to know is that debt problems are solvable — and the sooner you face them, the more options you will have. This guide walks you through the first practical steps to take control.
Step 1: Don't Panic, but Don't Ignore It
Debt can feel overwhelming, especially when letters and phone calls start piling up. Ignoring debt will not make it go away — in fact, it usually makes things worse, as charges and interest can build up and creditors may take further action.
The single most important first step is to open all your post and face the reality of your situation. You do not need to have all the answers yet. You just need to know where you stand.
Step 2: Work Out Exactly What You Owe
Make a list of every debt you have. For each one, note down:
Information to gather
Who the creditor is (the company or person you owe money to)
How much you owe in total
What the monthly payment is
Whether the debt is secured or unsecured
Whether any payments are in arrears (behind schedule)
The interest rate or charges being applied
Secured vs unsecured debt
Secured debts are tied to an asset — typically your mortgage or a loan secured against your home. If you do not keep up payments, the lender could repossess the asset.
Unsecured debts include credit cards, personal loans, overdrafts, store cards and catalogues. They are not tied to a specific asset, but creditors can still take legal action to recover the money.
Step 3: Identify Your Priority Debts
Not all debts are equal. Some debts have more serious consequences if you do not pay them. These are called priority debts and should be dealt with first.
Priority debts typically include:
Examples of priority debts
Mortgage or rent arrears — you could lose your home
Council tax arrears — can lead to bailiff action or imprisonment
Gas and electricity arrears — your supply could be cut off
Court fines — non-payment can lead to imprisonment
Child maintenance arrears
Income tax or VAT arrears
Non-priority debts
Non-priority debts are still important, but the immediate consequences of missing payments are less severe. These include credit cards, personal loans, overdrafts, store cards, catalogues, and water arrears.
Even with non-priority debts, creditors can take you to court, so do not simply ignore them — include them in your plan.
Step 4: Create a Budget
Before you can decide how to deal with your debts, you need to understand your income and spending. A simple budget will show you how much money you have left each month to put towards debt — or whether you have a shortfall.
See our guide on making a debt budget for a step-by-step walkthrough.
Step 5: Get Free, Independent Advice
You do not have to figure this out alone — and you should not pay for advice when free, independent help is available from reputable UK organisations. Consider contacting:
StepChange Debt Charity — free debt advice and debt management plans
Citizens Advice — free, confidential advice on debt and many other issues
National Debtline — free telephone advice and self-help tools
MoneyHelper — free government-backed money guidance
A free debt adviser can help you understand your options, negotiate with creditors, and set up a debt solution if appropriate.
Step 6: Explore Your Debt Solutions
Depending on your circumstances, there may be several options for dealing with your debts. These range from informal arrangements with creditors to formal legal solutions such as:
Common UK debt solutions
Debt Management Plan (DMP) — an informal arrangement to repay debts at an affordable rate
Individual Voluntary Arrangement (IVA) — a legally binding agreement with creditors
Debt Relief Order (DRO) — for people with low income and few assets
Bankruptcy — a legal process that writes off most debts
Administration Order — a court-based arrangement for debts under £5,000
Frequently asked questions
Should I take out a consolidation loan to pay off my debts?▾
Will dealing with my debt affect my credit file?▾
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.
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How to Deal with Creditors: Communication and Negotiation
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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.