Options for dealing with debt

This page tells you about the options you may have for dealing with your debts.

Your options will depend on whether you’ve got any money to pay off your debts.

For information on how to work out if you have enough money to pay off your debts, see How to sort out your debts.

If you’ve got money to pay off your debts

If you’ve got money to pay off your debts, you must make sure you deal with any urgent debts first. Some debts are more urgent than others because the consequences of not paying them can be more serious. These debts are called priority debts. They include things like mortgage, rent and council tax debts.

To find out if you have any priority debts, see How to sort out your debts.

To find out how you should deal with priority debts, see How to deal with your creditors.

As well as priority debts, you may have other types of debt called non-priority debts. Non-priority debts include:

  • benefits overpayments
  • credit debts such as overdrafts, loans, hire purchase, credit card accounts and catalogues
  • student loans
  • money borrowed from friends or family
  • parking penalties issued by local authorities.

These types of debt are less urgent than priority debts. You can’t be sent to prison or have your home repossessed for not paying them – although you can have property you’ve bought under a hire purchase agreement taken away.

However, you must still make arrangements to pay off non-priority debts if you have  money left over after paying off any priority debts. If you don’t make arrangements to pay off non-priority debts, your creditors may take you to court and could take further action such as using bailiffs to take your possessions away.

Non-priority debts don’t include secured loans. These are loans which have been secured against a house or other property which you own. You can lose this property if you don’t pay a secured loan.

For more information about secured loans, see Mortgages and secured loans.

If you have any money to pay off non-priority debts, you will need to work out the best way of doing this. You may have several options, including:

  • dealing with creditors yourself. For more about this, see How to deal with your creditors
  • asking a debt management company to deal with your creditors through a Debt management plan
  • applying for an Administration Order
  • applying for an Individual Voluntary Arrangement (IVA)
  • putting all your debts into one loan. This is called loan consolidation

You should weigh up the advantages and disadvantages of each of these options carefully. Get as much information as you can before making a decision and don’t sign anything until you are sure it is the best option for you. If you have any questions, get advice.