What are my options if I cannot repay my debts?

This is a map, not a recommendation. Which solution fits depends on how much you owe, what you own, what you earn, whether you are a homeowner, and which nation of the UK you live in — the statutory schemes differ. The single most important point is that these are not interchangeable and the wrong choice is expensive to undo.

Safety

Step by step

1. Start with an informal arrangement.Offering creditors reduced payments based on an income and expenditure statement. Nothing is binding, interest may or may not be frozen, but it is reversible and has the mildest consequences.
2. Understand a debt management plan.One monthly payment distributed among non-priority creditors, usually arranged by a free provider such as StepChange. Informal, so creditors can still refuse or add interest, and it appears on your credit file through the reduced payments.
3. Understand a debt relief order.A statutory solution in England, Wales and Northern Ireland for people with low debts, low income and few assets. Debts are written off after a period. There are strict eligibility limits which change, so check the current thresholds with an adviser.
4. Understand an individual voluntary arrangement.A binding agreement with creditors, supervised by an insolvency practitioner, usually running for several years. It can protect a home but it is inflexible, fees are taken from your payments, and failure can lead to bankruptcy.
5. Understand bankruptcy.A formal insolvency process with an application fee, which writes off most debts but can involve losing assets including, potentially, a home. It also affects certain occupations and directorships.
6. Check the Scottish options separately.Scotland has its own statutory schemes — the Debt Arrangement Scheme, protected trust deeds and sequestration. They are not the same as their English equivalents and the advice must be Scotland-specific.
7. Check what each does to priority debts.Some debts are excluded from statutory solutions — certain fines, student loans, and debts arising from fraud among them. An adviser will identify which of yours are.
8. Check the effect on your home and vehicle.Home equity and a vehicle above a certain value are treated differently by each solution. This is often the deciding factor.
9. Check the effect on your job.Some professions and roles have restrictions or reporting requirements around insolvency. Check your contract and any professional body rules before proceeding.
10. Get free advice before committing to anything.All of these are available through free providers. Fee-charging firms sell the same solutions with a charge attached and sometimes with a bias towards the one that pays them most.

Tips

• Every formal solution shows on your credit file for years and appears on a public register in some cases. Understand that before, not after.
• The eligibility thresholds for debt relief orders change. Never rule yourself out on the basis of a figure you read somewhere — ask an adviser.
• If a firm recommends a solution in the first conversation without a full income and expenditure review, get a second opinion from a free provider.

Common mistakes

• Choosing a solution from an advert — Firms advertising debt solutions are usually paid more for some routes than others, and an unsuitable formal solution is difficult and expensive to exit.
• Assuming a statutory solution covers everything — Certain debts are excluded, and priority debts and ongoing liabilities continue. Knowing which is part of the advice.

If it doesn't work

Questions people ask