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If you owe people money (your 鈥榗reditors鈥�) 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 and .

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鈥檝e had a county court judgment (CCJ) or a High Court judgment (HCJ) against you for debts under 拢5,000
• an Individual Voluntary Arrangement which is managed by an insolvency practitioner

You can also get temporary protection from your creditors through the 鈥楤reathing Space鈥� scheme, while still making repayments. You鈥檒l need to apply through a debt advisor.

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

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 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 鈥楤reathing Space鈥�.

You can get temporary protection for up to 60 days.

You鈥檒l 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鈥檙e 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 鈥楤reathing Space鈥� scheme, you need to talk to a debt adviser. They will submit an application on your behalf if it鈥檚 the right thing to do.

You can on the MoneyHelper website. You can get confidential advice online, over the phone or in person.

If you鈥檙e receiving mental health treatment and cannot speak to a debt adviser, someone else can do so on your behalf.

Costs

It鈥檚 free to apply for 鈥楤reathing Space鈥�, 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 鈥楤reathing Space鈥� scheme
• not have used the 鈥楤reathing Space鈥� scheme in the last 12 months, unless it was for a mental health crisis

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

Get a Debt Management Plan

1. Set up a plan with a debt management company authorised by the Financial Conduct Authority (FCA). for an authorised company.

2. The company works out your monthly payments. You鈥檒l have to give details about your financial situation, for example your assets, debts, income and creditors.

3. 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

Eligibility

Debt Management Plans can only be used to pay 鈥榰nsecured鈥� 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.

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 拢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鈥檚 permission.

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 鈥榗omposition order鈥� if you cannot pay all your debts.

Costs

There鈥檚 a court fee each time you make a payment. This cannot be more than 10% of your debt.

Example

Eligibility

You must:

• owe less than 拢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 鈥� known as an 鈥榓ttachment of earnings order鈥�
• 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鈥檚 usually removed 6 years after the date the order was made.

Your entry is marked as 鈥榮atisfied鈥� if you repay your debts in full.

You can also ask the court for a 鈥榗ertificate of satisfaction鈥�. To do this, write to the court and send a cheque for 拢18 (made payable to His Majesty鈥檚 Courts and Tribunal Service).

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.

Get an Individual Voluntary Arrangement (IVA)

Use an to get an IVA.

Your insolvency practitioner works out what you can afford to repay and how long the IVA lasts. You鈥檒l 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.

Costs

There are usually 2 fees:

• a set up fee
• a handling fee each time you make a payment

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鈥檚 removed 3 months after the IVA ends.

Debt Relief Orders (DROs) are one way to deal with your debts if you:

• owe less than 拢50,000
• do not have much spare income - usually less than 拢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 (鈥榬estrictions鈥�) during that time
• will not need to pay the debts or follow restrictions after 12 months

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 拢500 without telling the lender about your DRO
• act as the director of a company
• create, manage or promote a company without the court鈥檚 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

Eligibility

You鈥檙e generally eligible if you meet all of these criteria:

• you owe less than 拢50,000
• you鈥檝e less than 拢75 a month spare income
• you鈥檝e less than 拢2,000 worth of assets
• you do not own a vehicle worth 拢4,000 or more
• you鈥檝e 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.

Records

Your DRO will:

• be added to the Individual Insolvency Register - it鈥檚 removed 3 months after the DRO ends
• stay on your credit record for 6 years - this is the same as other debt relief options