If you owe people money (your ‘creditors’) you can make arrangements to pay your debts. Your options depend on the amount of money and assets you have. Where you can get help Speak to a debt adviser to get help choosing the best way to deal with your debt. MoneyHelper has information about debt management and free debt advisory services . Paying off your debts You can pay your debts in instalments by setting up: a Debt Management Plan which is an agreement with your creditors managed by a financial company an Administration Order when you’ve had a county court judgment ( CCJ ) or a High Court judgment ( HCJ ) against you for debts under £5,000 an Individual Voluntary Arrangement which is managed by an insolvency practitioner You can also get temporary protection from your creditors through the ‘Breathing Space’ scheme , while still making repayments. You’ll need to apply through a debt advisor. In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme . You may also have the option of reaching an informal agreement with your creditors. If you cannot pay off your debt You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell. If you cannot pay off your debts, you can be made bankrupt .

Breathing Space (Debt Respite Scheme)

If you live in England or Wales, you can get temporary protection from your creditors while you get debt advice and make a plan. This scheme is called ‘Breathing Space’. You can get temporary protection for up to 60 days. You’ll still need to make your debt repayments. If you get it: enforcement action cannot be taken against you your creditors cannot contact you about debts included in your Breathing Space your creditors cannot add interest or charges to your debt If you’re getting mental health crisis treatment, your protection from creditors will be longer. It will last for the length of your treatment, plus another 30 days. How to apply for the Breathing Space scheme To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser. They will submit an application on your behalf if it’s the right thing to do. You can find a free debt adviser on the MoneyHelper website. You can get confidential advice online, over the phone or in person. If you’re receiving mental health treatment and cannot speak to a debt adviser, someone else can do so on your behalf. Costs It’s free to apply for ‘Breathing Space’, but some debt advisers may charge you a fee. Eligibility You must: not have a debt relief order ( DRO ), an individual voluntary arrangement ( IVA ), an interim order, or be an undischarged bankrupt at the time you apply not already be using the ‘Breathing Space’ scheme not have used the ‘Breathing Space’ scheme in the last 12 months, unless it was for a mental health crisis

Debt Management Plans

A Debt Management Plan is an agreement between you and your creditors to pay all of your debts. Debt management plans are usually used when either: you can only afford to pay creditors a small amount each month you have debt problems but will be able to make repayments in a few months You can arrange a plan with your creditors yourself or through a licensed debt management company for a fee. If you arrange this with a company: you make regular payments to the company the company shares the money out between your creditors MoneyHelper has information about where to get free debt advice . Get a Debt Management Plan Set up a plan with a debt management company authorised by the Financial Conduct Authority (FCA). Search the Financial Services Register for an authorised company. The company works out your monthly payments. You’ll have to give details about your financial situation, for example your assets, debts, income and creditors. The company contacts your creditors and asks them to agree to the plan (they do not have to). Unless stated in the agreement, your creditors can still: ask you to pay your full debt at a later date take action to recover their money even if you keep up your payments Costs Some companies will charge: a set up fee a handling fee each time you make a payment Make sure you understand the costs of your plan and how you pay for it. Eligibility Debt Management Plans can only be used to pay ‘unsecured’ debts, for example debts that have not been guaranteed against your property. Your responsibilities Your plan can be cancelled if you do not keep up your repayments.

Administration orders

An administration order is a way to deal with debt if you have a county court or High Court judgment against you and you cannot pay in full. The debt must be less than £5,000. You make one payment a month to your local court. The court will divide this money between your creditors. Creditors listed on the administration order cannot take any further action against you without the court’s permission. MoneyHelper has information about where to get free debt advice . Get an administration order Fill in an application for an administration order (form N92) and return it to your local court. The court decides: how much of your debt you have to repay, for example all or just part of it how much your monthly repayments will be how long the arrangement lasts The arrangement is known as a ‘composition order’ if you cannot pay all your debts. Costs There’s a court fee each time you make a payment. This cannot be more than 10% of your debt. Example If you owe £5,000 the total fee cannot be more than £500. Eligibility You must: owe less than £5,000, including any interest and charges owe money to at least 2 creditors prove you can afford regular repayments, for example by giving details of your income have a county court or High Court judgment against you, which you cannot pay in full Your responsibilities You must keep up your repayments or the court can: ask your employer to take money from your wages – known as an ‘attachment of earnings order’ cancel the arrangement You may still be able to keep your business running, if you have one. Public records Your administration order is added to the Register of Judgments, Orders and Fines. It’s usually removed 6 years after the date the order was made. Your entry is marked as ‘satisfied’ if you repay your debts in full. You can also ask the court for a ‘certificate of satisfaction’. To do this, write to the court and send a cheque for £18 (made payable to His Majesty’s Courts and Tribunal Service).

Individual Voluntary Arrangements

An Individual Voluntary Arrangement ( IVA ) is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner, who will divide this money between your creditors. An IVA can give you more control of your assets than bankruptcy. MoneyHelper has information about where to get free debt advice . Get an Individual Voluntary Arrangement ( IVA ) Use an insolvency practitioner to get an IVA . Your insolvency practitioner works out what you can afford to repay and how long the IVA lasts. You’ll have to give details about your financial situation, for example your assets, debts, income and creditors. Your insolvency practitioner will contact your creditors. The IVA will start if the creditors holding 75% of your debts agree to it. It will apply to all your creditors, including any who disagreed to it. An IVA will stop your creditors taking action against you for your debts. Costs There are usually 2 fees: a set up fee a handling fee each time you make a payment Make sure you know how much it’s going to cost before asking an insolvency practitioner to act for you. Your responsibilities Your IVA can be cancelled by the insolvency practitioner if you do not keep up your repayments. The insolvency practitioner can make you bankrupt. You may still be able to keep your business running, if you have one. Public records Your IVA will be added to the Individual Insolvency Register . It’s removed 3 months after the IVA ends.

Debt Relief Orders ( DROs ) are one way to deal with your debts if you: owe less than £50,000 do not have much spare income - usually less than £75 per month do not own your home If you have a DRO , you: stop making payments towards your debts (including interest) for 12 months need to follow certain rules (‘restrictions’) during that time will not need to pay the debts or follow restrictions after 12 months A DRO can be cancelled if your financial circumstances change. It can be extended if you do not follow the restrictions. You will still have to pay: your rent and bills certain debts not included in the DRO , such as student loans or court fines Restrictions There are restrictions on what you can do while you have a DRO . You cannot: borrow more than £500 without telling the lender about your DRO act as the director of a company create, manage or promote a company without the court’s permission manage a business without telling those you do business with about your DRO open a bank account without telling the bank or building society about your DRO You may be prosecuted if you break any of these restrictions while you have a DRO. Eligibility You’re generally eligible if you meet all of these criteria: you owe less than £50,000 you’ve less than £75 a month spare income you’ve less than £2,000 worth of assets you do not own a vehicle worth £4,000 or more you’ve lived or worked in England and Wales within the last 3 years you have not applied for a DRO within the last 6 years Get a Debt Relief Order Contact an approved debt adviser to apply for a DRO . You cannot apply for a DRO on your own. You do not need to pay for a DRO . MoneyHelper has information about where to get free debt advice . Records Your DRO will: be added to the Individual Insolvency Register - it’s removed 3 months after the DRO ends stay on your credit record for 6 years - this is the same as other debt relief options

Options for dealing with your debts

Overview

If you owe people money (your ‘creditors’) you can make arrangements to pay your debts. Your options depend on the amount of money and assets you have.

Where you can get help

Speak to a debt adviser to get help choosing the best way to deal with your debt.

MoneyHelper has information about debt management and free debt advisory services.

Paying off your debts

You can pay your debts in instalments by setting up:

a Debt Management Plan which is an agreement with your creditors managed by a financial company
an Administration Order when you’ve had a county court judgment (CCJ) or a High Court judgment (HCJ) against you for debts under £5,000
an Individual Voluntary Arrangement which is managed by an insolvency practitioner

You can also get temporary protection from your creditors through the ‘Breathing Space’ scheme, while still making repayments. You’ll need to apply through a debt advisor.

In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.

You may also have the option of reaching an informal agreement with your creditors.

If you cannot pay off your debt

You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell.

If you cannot pay off your debts, you can be made bankrupt.

View a printable version of the whole guide

Options for dealing with your debts

Overview

Where you can get help

Paying off your debts

If you cannot pay off your debt

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Options for dealing with your debts

Overview

Where you can get help

Paying off your debts

If you cannot pay off your debt

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