StepChange Explained: What It Does and How It Works

What StepChange is

StepChange is a registered charity that provides debt advice in the UK. Its services are free to the person getting help. Charities fund their work in different ways, including grants and contributions from lenders and other organisations. Because it is a charity, it is independent of any single creditorHow to Deal with Creditors: Communication and NegotiationPractical advice on communicating with creditors, negotiating affordable repayments, and understanding your rights when dealing with the companies you owe.Read more → and its advisers do not earn commission for the solution they recommend. It operates across the UK, with specific advice for Scotland and Northern Ireland as well as England and Wales.

How to get help

You can usually start online, by phone or through a webchat. Most people begin with an online tool that asks about your income, spending and debts and then recommends next steps. You can also talk to an adviser directly. The process generally follows a pattern:

1. Tell them your situation: You provide details of your debts, income and spending.
2. Get a budget and options: The service shows what you can afford and the solutions that may fit.
3. Choose a route: Depending on your case, this might be a debt management plan, a formal solution or advice on negotiating with creditors.
4. Set up and ongoing support: If you choose a solution, the charity helps arrange it and may support you while it runs.

The solutions it can help with

StepChange advisers explain all the main UK debt solutions. Depending on where you live and your circumstances, these may include:

• A debt management plan: An informal agreement to repay at an affordable rate, set up and managed for free. See debt management plans.
• Breathing Space: A temporary legal pause on enforcement, started by an authorised adviser. See Breathing Space.
• A Debt Relief Order: A formal solution for people with low income, low debts and few assets. See Debt Relief Orders.
• Other formal options: Where a different solution such as an IVA or bankruptcyIVA vs DMP vs DRO vs Bankruptcy ComparedA side-by-side comparison of the main UK debt solutions: IVA, debt management plan, Debt Relief Order and bankruptcy, with costs, length and consequences.Read more → may suit you better, an adviser can explain it and signpost you.

How a debt management plan from a charity works

With a plan set up through a charity, you make one monthly payment, which the charity distributes to your creditors. Creditors are asked to freeze interest and charges, and many do, but they are not legally forced to. You usually get a regular statement, and the plan is reviewed from time to time. A plan is informal, so it is flexible, but creditors are not legally bound by it. If you miss a payment, the creditors may react, so read our guide on a missed DMP payment.

Who it suits

StepChange can help people at different stages. It is a good fit if you want free advice and a full picture of your options, if you can afford a reduced but regular payment and want an informal plan, or if you want help applying for Breathing SpaceBreathing 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.Read more → or a Debt Relief OrderDebt 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.Read more →. It may be less suited if you want in-person, local help for multiple problems, in which case Citizens Advice may be better. You can use more than one service.

Things to bear in mind

• Credit records: A debt management plan is flagged on your credit fileHow Credit Scores Work in the UKHow UK credit scores work: what the credit reference agencies record, what affects your score, why scores differ between agencies and what lenders actually see.Read more →, and your ability to borrow may be limited while the plan runs.
• Not legally binding: Creditors can still take action in some cases.
• Time: A plan may take years to clear your debts.
• Honesty: Give full and accurate details, because creditors may check.
• Priority debts: Keep rent, council tax and energy paid.

Beware of lookalikes

Fee-charging companies sometimes advertise using similar words to the charities. Always check the web address, look for the charity registration and be careful about adverts. If anyone asks for a fee for "joining" a free plan, stop and check. For other free options, read our guide to free debt advice in the UK.

A worked example

Leah owes £12,000 across cards and a loan, and has £150 a month spare. She uses an online debt adviceDebt Advice Near Me: Local, Online and 24-Hour HelpHow to find free debt advice near you in the UK: face-to-face appointments, local charities, phone and webchat, out-of-hours help and how to spot scams.Read more → tool, which asks about her income, spending and debts and recommends a debt management plan. She completes the process, makes a single monthly payment of £150 and her provider distributes it to her creditors. Several creditors freeze interest, and she gets regular statements. She keeps paying her rent and council tax separately. After a few years, her circumstances improve and she increases her payment. The plan does not erase the debt, but it makes it manageable and keeps her out of court.

What to do if your circumstances change

Tell the provider straight away if your income or costs change. They can review your plan, adjust the payment and explain what to do if you cannot keep up. If you find work, ask whether you can pay more. If you lose work, ask about a break or a revised plan. Open communication keeps the plan on track.