If you cannot pay your debts in 2026, you have several options from a free Debt Management Plan to a Debt Relief Order that writes off qualifying debts entirely. All organisations listed here are free to use.
Priority vs Non-Priority Debts
Priority debts carry serious consequences if unpaid -- loss of your home, utility disconnection or imprisonment in some cases. Non-priority debts carry no such immediate consequences. Always pay priority debts first.
Breathing Space -- The 60-Day Pause
The Breathing Space Scheme gives you 60 days where creditors cannot add interest, fees or charges and cannot take enforcement action. To access it, engage a free debt adviser -- StepChange, National Debtline or Citizens Advice can apply on your behalf. (Source: Debt Respite Scheme Regulations 2020)
Tip Contact StepChange at stepchange.org before doing anything else. They will map all your debts and recommend the right solution for free. |
Debt Management Plan (DMP)
A DMP is an informal arrangement where you make a single monthly payment to a free debt charity who distributes it to creditors. Creditors are asked to freeze interest -- many do but it is not legally guaranteed. No minimum debt level. Only use a free provider -- StepChange or PayPlan.
Debt Relief Order (DRO) -- Updated April 2024
IVA -- Individual Voluntary Arrangement
An IVA is a legally binding agreement managed by a licensed Insolvency Practitioner. Regular payments for typically 5-6 years; remaining debt written off. Requires creditors holding 75% of debt by value to agree. IP fees typically 3,000-6,000 pounds. Stays on Insolvency Register for 6 years. Only use an IP regulated by the IPA or ICAEW.
Important Be cautious of IVA firms advertising heavily on social media. Many charge upfront fees. Always get advice from a free debt charity first. |
Disclaimer: This article is for information only and does not constitute financial or legal advice. Consult a qualified adviser for guidance tailored to your situation. Always check the FCA register at register.fca.org.uk before dealing with any financial firm. |
Frequently Asked Questions
Will debt help damage my credit score?
Any formal solution is recorded on your credit file for 6 years. However if you are already missing payments, your file is already being damaged. Taking action gives you a clear end point.
Sources
- Debt Respite Scheme 2020: legislation.gov.uk
- StepChange: stepchange.org
