Debt & Money — Managing Debt, DROs, Bankruptcy & Credit Ratings

Managing unmanageable debt can feel overwhelming, but clear legal options exist in the UK to help you regain financial stability. Taking early action and understanding your choices allows you to find a manageable path forward.

When dealing with multiple debts, prioritize your payments. Priority debts include mortgage or rent payments, council tax, energy bills, and court fines. Non-payment of priority debts can lead to serious consequences such as home repossession, disconnection, or legal enforcement. Non-priority debts, such as credit cards, store accounts, and personal loans, should be managed after priority commitments are covered.

If you have low income and limited assets, a Debt Relief Order (DRO) may offer a suitable solution. In England and Wales, you can qualify for a DRO if you owe £50,000 or less, have £75 or less spare monthly income after paying essential household bills, and hold total assets worth £2,000 or less (excluding a motor vehicle worth up to £4,000). Application fees for DROs have been removed, making this route accessible to those who qualify. A DRO freezes debt repayments and interest for 12 months, after which qualifying debts are permanently written off.

For larger debt balances, bankruptcy provides an alternative formal procedure. Obtaining a bankruptcy order costs £680 and allows qualifying debts to be written off, though assets such as property or savings may be used toward repayment.

If you need breathing space to organise your finances, the government's Breathing Space scheme provides up to 60 days of legal protection from creditor action and freezes interest and charges while you work with an approved debt adviser.

Formal debt solutions will appear on your credit file for six years, impacting your ability to secure future credit. You can review your credit report for free with credit reference agencies like Experian, Equifax, or TransUnion to check for accuracy.

Free, confidential debt advice is available from qualified specialists. Reach out to StepChange Debt Charity, National Debtline, or Citizens Advice Debt Advice for personalized support, or read more on GOV.UK's clearing your debt guide.