Worried about debt and want to know ways to help avoid getting into financial difficulties then read on for some helpful advice, tips and general information about debt matters.

Debt FAQ

  • What Is Debt?

    Debt is any money or services or goods or anything else of value that is owed by one person or group to another party as the result of a previous agreement. For most people consumer debt takes the form of credit card loans, personal loans, mortgages and overdrafts.

  • Is Debt A Good Or Bad Thing?

    Attitudes to debt vary across different cultures and generations and are a matter of personal values and priorities. Some people consider all debt incurred for anything other than a long-term investment as unwise. Some would advise that you should try to spend only what you can afford and if you do take out a loan then it should only be for a significant investment like your home. Others believe that consumer credit is a standard part of life, it is good for the economy and it helps people have a good quality of life by obtaining goods and services more easily.

  • Is Debt Inevitable?

    The UK has high levels of home ownership, a situation which offers long term financial security for the vast majority and this is only achieved via debt - a mortgage loan which is paid back over a long period. Even if you don't like it the chances are that you like everyone will be in debt at some point in your life. This is because many of today's big purchases which are seen as essential such as a home or a car and they cost much more money than most people can earn in a reasonable amount of time. Interest fee credit deals on some items appear more like a bargain than a debt.

  • What Are The Worst Case Scenarios With Debt?

    Unfortunately serious debt, as opposed to moderate or minor debt, can lead to serious consequences if not managed carefully. In the worst case scenarios the loss of your home, bankruptcy and imprisonment could occur. When debt becomes a problem it can also have a negative impact on your health.

    Is The UK In Love With Debt?

    Average consumer borrowing via credit cards, finance deals, overdrafts and personal loans is rising in the UK. In fact, The UK has some of the highest levels of personal debt in the world. The level of debt is increasing at staggering levels - about a million pounds every four minutes. Total UK personal debt had exceeded £1 trillion (£1,000 billion) in 2006. In 2006 average household debt had risen to over £8,000 (excluding mortgages) and over £50,000 including mortgages.

  • What Can I Do To Avoid Debt?


    Communication is vital. If you're worrying about what you're spending talk to your partner, friends and family members. Get a spending plan together.


    Assess your outgoings and fix some spending limits. Discuss spending priorities with your partner and family, including long-term plans as well as day-to-day budgeting. Budget for irregular bills and expenses. Try and pay on time and use direct debits which may give you small discounts.

    Involve The Entire Family

    Discuss the family budget with your children. Teaching them they need to live within a budget is a good thing for their future.

    Stay In Control Of Your Finances

    Keeping track of your spending and building up an accurate picture of your spending helps to budget. Always check your bank statements and receipts. Seek help immediately if debts start to build up.

    Think Before Buying

    We all need to treat ourselves but think carefully about your purchases. Ask yourself whether what you buy is something you really need or whether it is something you just want or feel like you should have.

  • What Ways Can I Save Money?


    If you can do DIY work around the home it will save you money.

    Save On Energy

    Save money on energy bills. Turn off lights and electrical appliances when not in use and switch utilities bills to cheaper suppliers. Rising energy and council tax bills are forcing increasing numbers of people into debt.

    Do Not Waste

    Recycle and do not waste goods that are perfectly adequate. Reuse shopping bags for rubbish, do not waste food. Walking or cycling to work will save on petrol.

    Shop Around

    Compare prices on goods and services carefully and always obtain different quotes for services. Use Review Centre reviews for recommendations and check out our price comparison guides.

    Avoid Heavy Credit Card Debt

    One of the main causes of debt problems is via unsecured debts such as credit cards. Try and limit the number of your cards and pay off your debts on time to reduce your bills.

    Cut Down On Alcohol and Cigarettes

    It will be good for your health and these heavily taxed items are expensive over time.

    Use Cash

    Studies show that customers who pay with cash pay less than those who pay with credit cards. Customers paying with credit are more likely to overspend.

  • How Can I Manage My Debts Better?

    Pay On Time

    Paying your bills at the same time each month and checking your debts regular can have a profound effect. Having a system for paying your debts helps you stay in control and can ensure things don't spiral out of control.

    Start Saving

    Even if you are on a small budget you should always be able to save a small sum each month. Having even a few saving can help in case you run into difficulties paying off your debts or towards your bills. It is also a habit to get into.

    Monitor Your Debts

    Always check your bills each month to ensure that they are accurate. Regularly check to see you are still getting the best interest rates and best loan deals possible.

    Pay Off More

    Paying only the minimum is costly and will ensure that you have debt for a long time. Try and pay off your debts early. Beware of penalty charges for this though. Always check your policies.

    Limit Your Debts

    Many companies will be happy to offer you more loans if you have a good credit rating. While this is good on one hand, on the other it can lead to a vicious circle for some people. Take it easy. Only take out a loan when you need to and are happy you can afford it.

    Beware Of Credit Card Fraud

    Check your bank statements carefully. If you notice that your card is missing or that an unrecognized charge has appeared report it. Identity fraud can damage your credit rating. Arrange to see your credit report. Your bank will advise you.

    Shop Around For Loans

    If you do need a loan be sure to research it properly. There are lots of competitive deals and lots of not so competitive deals. Always understand how much you will pay for your loan in full and look for the lowest interest rates. Be realistic about what you can afford to repay.

  • What Is Debt Consolidation?

    Debt consolidation involves taking out a one off large loan that will pay off all your existing debts. The benefits of this are that you should be offered the loan at a lower rate of interest than your current loans and you should be able to pay back your debt over a longer period of time. But beware - debt consolidation can mean paying out more money in the long run and you may be asked to offer your home as security on the debt.

  • I Am In Serious Debt Difficulties, What Can I Do?

    If you find yourself troubled with debt do not panic as there are many solutions available. Equally, do not bury your head in the sand. Your debt if it has become a problem will not go away so you must tackle the problem head on before it gets even worse.

    Consider The Following As Your Battle Plan:

    1. It is good to talk. It is important to speak about your debt for a number of reasons. Debt is stressful and can damage your health as well as your bank balance. If there is no one close at hand like a family member or friend there are a number of charities who offer everything from counselling to more personalised debt management advice. Contact a free service for independent advice such as National Debtline or the Citizens Advice Bureau.
    2. Prioritise. Meeting repayments on essential services like mortgage and utility bills should be your number one priority. Pay off credit and store cards with the highest interest rates first. Consider your priority debts first.
    3. Switch your credit card balance or mortgage. Immediate help may be possible by switching and finding a lower interest rate. There are many competitive deals available these days.
    4. Talk to your lender. Many companies are sympathetic to those who cannot afford their repayments. Recovering debt can be expensive and they are often willing to work out an agreement which could immediately ease your mind and save them the trouble of taking you to court. There is no reason why you cannot do this yourself. If in doubt take some independent advice.
    5. Avoid extra charges. Some companies may try and charge you for legal advice and counselling. Insolvency practitioners may charge fees and unless you are careful you could end up with further arrears and a possible court action to contend with. There are many free support networks which offer free legal advice and other forms of help so seek them out.
    6. Don not panic. Never be rushed into signing anything. If necessary have contracts checked by a third party before signing. Take responsibility and seek good advice.

    What More Can I do To Sort Out My Debts?

    Work out your budget and decide how much you can afford each week or month to pay off your debts. Identify priority debts.

    Contact all your creditors as soon as possible. Offer to pay off the debt at an amount you can afford even if it's only a small amount per week or month. You will be surprised by the results.

    Cut out all unnecessary spending and cut up store cards and credit cards.

    Earn more money if you can. Can you work overtime, work weekends, take on a lodger? Are you missing out on any tax breaks or benefits?

    Switch to a basic bank account which will helrevent overspending.

    Rise to the challenge. Tackle the problem. Do something today. Don't give up. Everything can be sorted. The sooner you act the better it will be in the long run.

    Can I Remortgage Or Get A Secured Loan?

    There are various options to consider and remortgaging your home is just one of them. The low interest rates in the UK in recent years has meant houses can be used fairly easily to consolidate other debts by remortgaging. The amount of re-mortgaging deals has risen significantly in recent years. A remortgage may reduce your overall monthly debt payments. But you need to remember that if you cannot keep up repayments on a mortgage or other debt secured against your property you risk losing your home. And remember you are likely to be paying over a longer period.

  • What Are Priority Debts?

    Priority debts are things you should consider as a priority because if you fail to meet them the consequences are serious.


    Don't pay and a court order could be made to evict you.

    Mortgage Repayments

    Don't pay and be evicted and lose your home.

    Fuel Bills

    Don't pay and gas or electricity can be cut off.

    Council Tax

    Don't pay and get sent to prison.

    Income Tax

    Don't pay and HM Revenue & Customs could start bankruptcy proceedings.

    Court Fines

    Don't pay and get sent to prison.

  • What Is An IVA?

    An IVA is an Individual Voluntary Arrangement. An IVA an alternative to bankruptcy which was introduced by the UK government as part of the 1986 Insolvency Act. Debtors can make a proposal to creditors to reach a settlement. If approved by a majority of the creditors the IVA stands as a contract that binds all parties and prevents any further legal action. An IVA is a good alternative when someone cannot pay their debts but does not want to file for bankruptcy. It can be a good option to creditors as well, as often they will receive a better financial result than in bankruptcy. Always get some free independent advice on IVAs from one of the many good advice services/registered charities offering debt advice. The Citizen's Advice Bureau is a good place to start.