How to Get Out of Debt in the UK: Step-by-Step Guide 2026

Most people in the UK do not get out of debt by making one big decision. They get out of debt by making eight smaller ones, in the right order.

The order matters more than any single tactic. Skip step 1 and every later step is a guess. Skip step 3 and the pressure keeps rising while you are trying to think. Skip step 4 and you end up on the wrong route and spend years unwinding it.

This guide is built for anyone in England or Wales. Every step is anchored to the actual rules that govern how creditors and debt firms have to behave: the FCA Consumer Credit Sourcebook (CONC), the Debt Respite Scheme Regulations 2020, and the specific protections most articles on this search mention only in passing. The order below is the order most people who successfully get out of debt actually use.

This is general information about UK personal debt. It is not personal financial advice or regulated debt advice.

Step 1: Face it and get the numbers on paper

The first move is always the same, and it is always the hardest. Nothing else works until you know two figures: how much you owe in total, and what you can genuinely afford to pay each month after essentials.

The total is not a guess. It is a list of every creditor, the balance on each account, the interest rate, and the current payment. If you avoid opening the letters, that list feels impossible. Once it is written down, the number is almost always smaller than the number in your head.

The affordability figure comes from a proper income and expenditure assessment. That means every household bill, food, transport, essential clothing, minimal savings for known irregular costs (car MOT, school uniform, boiler service), and only then whatever is left. The figure that comes out of that exercise is your surplus, and it drives every decision after this.

Step 2: Priority versus non-priority debts

Not all debts are equal. This is where most people go wrong, and it is where the debt industry has, historically, made the most money out of confusion. Priority debts are the ones where non-payment costs you something you cannot buy back: your home, your liberty, your utilities, or your ability to drive to work.

Priority debts (roughly in order):

• Mortgage arrears or secured loan arrears
• Rent arrears
• Council tax arrears
• Magistrates court fines
• Energy arrears (gas, electricity)
• TV Licence arrears
• Income tax, VAT and self-assessment arrears (HMRC)
• Child maintenance
• County Court Judgments where a bailiff is involved

Non-priority debts are almost everything else: credit cards, overdrafts, personal loans, catalogue debt, store cards, buy-now-pay-later, payday loans, and most old debts sold on to debt purchasers. Non-priority creditors can chase you, add interest under the contract, and eventually go to court. What they cannot do is repossess your home or cut off your energy.

The practical rule: keep priority debts paid or in a formal arrangement, in that order, before you send a penny to any non-priority creditor. Even £1 token payments to non-priority debts (under CONC 7.3.4R forbearance) are enough to keep the wolves at bay while priority debts are stabilised.

Step 3: Buy time if you need it

There is a point in almost every debt journey where the person needs the phones to stop ringing so they can think. In England and Wales, that pause exists in statute. It is called Breathing Space, and it comes from the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.

Breathing Space is not a debt solution. It is a legal pause. For up to 60 days, creditors of included debts cannot add interest, charges or fees, cannot take enforcement action, and cannot contact you about those debts. Applying for it goes through a debt adviser, not through the debt itself.

In plain English: during a moratorium, any interest a creditor tries to add is null and void. Any collection action they take is null and void. This is not a request for a favour. It is a statutory instruction backed by a nullity clause. The 60-day version applies to most debts. A separate mental health crisis moratorium runs for the length of the crisis treatment plus 30 days.

You cannot have used the standard Breathing Space in the previous 12 months. You have to apply through an FCA-authorised debt adviser. But once it is granted, the pause is real, and the register entry is enforceable against every listed creditor.

Step 4: Pick your route

This is the step that decides the next five years. There are five routes out of consumer debt in the UK. Most people qualify for two or three of them. The right one depends on the total owed, the type of debt, the surplus you have, and whether you own property.

• Direct negotiation and token payments. Best where the amount is manageable, the surplus is thin but positive, and creditors are willing to freeze interest. Anchored in CONC 7.3.4R.
• Debt Management Plan (DMP). An informal plan managed either by you or a free/fee-charging DMP provider. Best for multiple non-priority debts and a modest surplus. Not legally binding on creditors.
• Individual Voluntary Arrangement (IVA). A formal insolvency arrangement lasting typically five to six years. Binds all included creditors once 75% by value approve. Best where the surplus is meaningful and there are assets to protect.
• Debt Relief Order (DRO). A 12-month moratorium ending in write-off, for people with low income, low assets, and qualifying debts (the DRO thresholds published by the Insolvency Service apply).
• Bankruptcy. A formal insolvency route ending in discharge, typically after 12 months. Fastest legal reset. Not appropriate where there is significant home equity or where the person needs to keep certain professional roles.

Important: every route on that list carries real consequences. Read Step 5 before you pick. The risks are not small print. They shape the next five to six years of your credit file, your housing position, and, in the case of IVA and bankruptcy, what you are allowed to own.

Any FCA-authorised firm selling any of these products has to comply with CONC 8.3, the pre-contract information and advice rules. This is the checklist most people never see. If any commercial provider skips it, the advice is defective under FCA rules, and you can complain, cancel and reclaim on that basis.

In plain English: before any debt management firm signs you up, they must warn you about all five of those points in writing. Priority debts still need paying. Missed payments still have consequences. Legal action can still start. The plan does not automatically freeze anything. If the sales script skipped any of those, the firm has breached CONC 8.3.4R and you have a live complaint.

Picking the wrong route costs years. The £27.50 Clarity Call exists specifically for the person who has read all five options and cannot decide which one fits.

Step 5: Know the risks of the route you pick

Every route on Step 4 carries serious, long-running consequences. Any adviser or firm that only lists the upsides is not doing the job. These are the real risks, in the language of the actual rules, so you can compare like for like before you pick.

• DMP. Not legally binding on creditors. Interest is not automatically frozen: unless the creditor agrees under CONC 7.3.4R the balance can keep growing while you pay. Defaults still register on the credit file for six years. Any creditor can pull out of the plan or take court action at any point. There is no legal protection from enforcement.
• IVA. A formal insolvency arrangement on the Individual Insolvency Register. Expenditure is restricted for the whole five to six years to a level the Supervisor allows, not the level you would choose. Homeowners will normally be required to release equity in year five, and if that is not possible the IVA is typically extended by 12 months. If the arrangement fails, the outstanding debt is not written off and bankruptcy remains on the table. The IVA stays on the credit file for six years from the arrangement start.
• DRO. On the Individual Insolvency Register for the 12-month moratorium and on the credit file for six years from the order. You cannot obtain most credit over £500 while the moratorium runs, and if your circumstances improve materially the Official Receiver can revoke the DRO and the debts are back in full. If the Official Receiver finds the conduct that led to the DRO was dishonest, reckless or otherwise blameworthy, a Debt Relief Restrictions Order or Undertaking can extend the standard restrictions for between two and fifteen years past the 12-month DRO period (Insolvency Act 1986, Schedule 4ZB).
• Bankruptcy. The trustee takes control of your assets, including home equity above the low exclusion band. The family home can be sold to realise that equity. Certain professional roles (director of a limited company, some FCA-regulated roles, some legal and accountancy roles) are restricted for undischarged bankrupts. On the Individual Insolvency Register for the bankruptcy period plus three months, and on the credit file for six years from the order. If the Official Receiver finds the conduct that led to bankruptcy was dishonest, reckless or otherwise culpable, a Bankruptcy Restrictions Order or Undertaking can extend the standard restrictions for between two and fifteen years past discharge (Insolvency Act 1986, Schedule 4A).
• Direct negotiation and token payments. No formal moratorium. Creditors are free to escalate to a Default Notice, a CCJ, and enforcement at any time. The account normally still defaults and the default stays on the credit file for six years.

The rebuild plan you pick lives with you for years. If you have read the risks and still cannot see which route fits, a Private Call is the paid consultation built for that decision, priced at £125 or £249 depending on length.

Step 6: Negotiate properly (in writing, using the rule)

Negotiating a debt is not begging. It is asking a regulated firm to comply with a rule that applies to it. Every creditor, every debt collector, every buyer of consumer debt in the UK is subject to the FCA's Consumer Credit Sourcebook. Chapter 7 of CONC is where the forbearance duty lives, and it is short enough to quote in full.

In plain English: a regulated firm is required to consider your position and treat you with forbearance. It is not permitted to demand full contractual payment when you have said, in writing, that you are in arrears and are seeking a reasonable arrangement. Every letter you write that references CONC 7.3.4R by name puts the firm on notice that the rule applies. Most firms respond very differently to a letter that cites the specific rule.

Write, do not phone. A phone call is a memory dispute; a letter is a record. Send by email or by post. Keep copies. Make the ask specific: freeze interest, freeze charges, agree a payment amount, review in 90 days. If the firm refuses without engaging with CONC 7.3.4R, escalate through their formal complaints process and then to the Financial Ombudsman.

The Letter Audit at £99 is built for this step: send the current letter, get a written reply drafted for you to sign and send.

Step 7: Set up affordable payments

The single most common reason a plan collapses is that the payments were set at the number the creditor wanted, not the number the household could sustain. A payment plan you cannot afford is not a plan; it is a delayed default.

The correct number is the surplus from Step 1's income and expenditure, allocated first to priority arrears, then to non-priority creditors in proportion to the balance owed on each. Token payments (as little as £1 per creditor per month) are legitimate where the surplus is genuinely thin. They preserve the account and comply with any obligation to make some form of payment. Before making any token payment on an old non-priority debt, read the guide on token payments alongside the article on statute barred debt, because the limitation position matters.

Once the payment is set, protect it. Automate the standing orders. Put the review date in the calendar. Anything that changes materially (income, rent, essential costs) is a reason to revise the figure, not a reason to stop paying.

Step 8: Rebuild

Getting out of debt is not the end of the story. The financial habits and the emergency fund built during steps 1 to 7 are what stop the cycle from repeating. Six months of essential costs in a genuinely separate account is the target. Not a savings goal to celebrate; a boundary that keeps future shocks from turning back into credit card balances.

The credit file catches up in its own time. A default drops off six years from the default date, whether or not the debt is paid. A DRO or bankruptcy stays on the file for six years from the order. An IVA stays for six years from the arrangement start. During that window, mainstream credit is limited, and that is the point. The absence of easy credit is what makes the rebuild possible.

The community around this work matters. Debt is easier to carry when the people around the kitchen table understand what the letters say and what the next move is. That is what the TRDG community is built for.

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