How to reduce your monthly debt payments

Most people in the UK experiencing financial difficulty instantly worry about how much they “should” be paying their creditors. They fear that paying too little will lead to being chased more aggressively or taken to court, so they focus on finding a magic number that will keep the creditor happy. In reality, there is no fixed “acceptable” token payment amount set by law, and trying to guess what a creditor wants often results in overpaying and underfunding your essential living costs.

The better approach is to flip the question. Instead of asking, “What will my creditors accept?”, you should be asking, “What can I genuinely and sustainably afford without falling behind on essentials?” This reflects the mindset the Financial Conduct Authority (FCA) expects firms to adopt when dealing with customers in arrears or financial difficulties.

The FCA regulates most consumer credit and debt collection activity in the UK through its Consumer Credit sourcebook (CONC). CONC 7 covers arrears, default, and recovery, and it still requires firms to support customers who are in financial difficulty as of 2026. This is important because it means your creditor can’t just ignore your situation and demand unrealistic payments.

Section CONC 7.3.4 of the FCA Handbook states:

What does this mean to you? To answer that, we first need to refer to Section 7.3.5.

Examples of treating a customer with forbearance would include the firm doing one or more of the following, as may be relevant in the circumstances:

In simple terms, the FCA guidance includes accepting no payments, reduced payments or token payments for a reasonable period where paying debts would leave you unable to cover essential living costs such as rent, food, or utilities.

So, the Financial Conduct Authority's rules require creditors to treat customers with “forbearance,” and the guidance demonstrates how this can be put into practice. The FCA has also strengthened protections in recent years, making it clear that any repayment plan should be sustainable and should not leave you unable to cover essential living costs or priority bills.

In simple terms, the amount you should pay your creditors is what’s left after covering your essential living expenses and priority debts. In most cases, priority debts should be paid first before making payments to non-priority creditors.

In practice, this can involve very low or even token payments for a period of time if your budget is tight. The FCA guidance makes it clear that accepting token payments can be suitable when making regular repayments would mean you can’t pay essentials such as your mortgage or rent, council tax, food, and energy. You're not expected to go without food, skip heating, or fall behind on council tax just to make a credit card payment.

Right now, unsecured debt is a serious issue for many households in the UK. Recent data shows that unsecured debt remains a significant concern, with average balances in the thousands and borrowing levels continuing to rise in recent years. Many households are also dedicating a substantial portion of their income to repaying unsecured debt, especially where budgets are already tight due to the cost of living.

When your living expenses are tight, making all contractual debt payments may not be realistic. This is exactly the type of situation token payments are designed for: a temporary and affordable solution to demonstrate your intention to pay while safeguarding your essential living costs, in line with FCA rules on forbearance.

Token Payments Are About Sustainability, Not Impressing Creditors

So, the question you should be asking is not, “What amount looks good?” but “What amount can I keep up with every month without falling behind on expenditure like rent, council tax, food, or energy?” A payment that seems “small” to a creditor might be huge to you if your income has dropped or your costs have increased. The FCA expects firms to avoid repayment plans that push you into more hardship, because that is not considered sustainable forbearance.

If your budget indicates you can only afford £1 per month for each non-priority debt at this time, then that is a fair token payment for your situation. There is no minimum figure in the FCA rules; the focus is on affordability and essential living costs rather than meeting a made‑up amount.

So, the question you should be asking is:

“What can I afford to pay to my creditors?”

As usual, we've got you covered. You can easily find this out using The Real Debt Guy budget planner. Once you’ve entered your figures, it will tell you what you can afford.

How to Use a Budget Planner to Work Out Your Token Payments

Using a budget planner forces you to be honest about your finances. You list your income first, then your essential expenses: housing costs, council tax, utilities, food, transport, childcare, and any priority debts such as rent arrears, council tax arrears, or court fines. The remaining amount after covering these essentials is your “disposable” amount for unsecured creditors.

If that disposable amount is small, you can split it fairly between your non-priority debts and propose token payments on that basis. This approach is exactly what creditors and the FCA expect: evidence-based, sustainable offers that ensure you can still cover your essentials. It also shows creditors that you are handling the situation responsibly, rather than ignoring the problem

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.