Author: Jessica

Debt Relief Orders — A Fresh Start for Low Income Households

If you are on a low income, owe debts you cannot realistically repay, and own very little, a Debt Relief Order (DRO) could be exactly the solution you need. Introduced in 2009 specifically for people in this situation, a DRO freezes your qualifying debts for 12 months — and if your circumstances have not improved by the end of that period, all those debts are written off completely. And as of June 2024, applying for a DRO is entirely free.

What Is a Debt Relief Order?

A Debt Relief Order is a formal insolvency solution, sitting alongside IVAs and bankruptcy in the framework of UK insolvency law. Unlike bankruptcy — which can be used by people with any level of debt and can put assets and home equity at risk — a DRO is designed specifically for people with:

• Relatively low total debt (up to £50,000)
• Very little spare income (less than £75 per month after essential costs)
• Minimal assets (less than £2,000 in total, excluding a vehicle worth less than £4,000)
• No home ownership

If you meet these criteria, a DRO is generally a far simpler, quicker, and less severe route out of debt than either an IVA or bankruptcy.

The Eligibility Criteria in Detail

Every criterion must be met at the time your DRO application is submitted. The rules changed significantly in June 2024, making DROs accessible to a much larger number of people:

Debt Level

Your total qualifying unsecured debts must not exceed £50,000. This limit was raised from £30,000 in June 2024. Qualifying debts include credit cards, personal loans, bank overdrafts, payday loans, council tax arrears, utility bill arrears, rent arrears, and similar unsecured debts.

Spare Income

After paying all your essential monthly costs — rent, food, gas and electricity, transport to work, and other reasonable living expenses — you must have less than £75 per month left over. This is sometimes called your disposable income or surplus income. If you have more than £75, you are expected to use it to repay your debts and will not qualify for a DRO.

Assets

The total value of everything you own must be less than £2,000. This excludes certain items — basic household furniture and appliances, tools and equipment needed for work, and your vehicle (see below). Savings, valuables, investments, and equipment not needed for work all count towards the limit.

Vehicle

You may own one vehicle worth up to £4,000. If your vehicle is worth more than this, you do not meet the DRO criteria unless the vehicle has been specially adapted for a disability. The vehicle limit was doubled from £2,000 in June 2024.

Home Ownership

You must not own your home or have any share in a property. Any stake in a property — freehold, leasehold, or shared ownership — disqualifies you from a DRO. Homeowners with debt problems need to look at IVAs or bankruptcy instead.

Prior DRO

You cannot apply for a DRO if you have had one approved within the previous six years.

Other Insolvency

You must not currently be subject to an IVA, bankruptcy, or any interim order when you apply.

The Application Process — Who Can Apply on Your Behalf?

This is one of the most important things to understand about DROs: you cannot apply for a DRO yourself. The application must be submitted by an approved intermediary — a debt adviser who has been authorised by a competent authority recognised by the Insolvency Service.

This safeguard exists to ensure applicants genuinely meet the criteria, that the information in the application is accurate, and that DROs are used appropriately. Approved intermediaries are found at free debt advice charities and organisations. The application itself is submitted electronically at no charge to you.

What Happens When a DRO Is Approved?

Once your DRO is approved by the Insolvency Service’s Adjudicator, several things happen simultaneously:

• The DRO is registered on the Individual Insolvency Register (publicly searchable)
• The 12-month moratorium period begins immediately
• All creditors named in the DRO are notified and must stop all collection activity
• Interest and charges on the included debts are frozen from this date

You do not make any payments to your creditors during the moratorium period.

What You Must and Must Not Do During the Moratorium

During the 12-month moratorium, you are subject to certain restrictions:

• You must not borrow £500 or more without telling the lender that you are subject to a DRO
• You cannot act as a company director or be involved in forming or managing a company
• You must report any significant improvement in your circumstances to the Insolvency Service promptly — including receiving an inheritance, winning money, or a substantial increase in income
• If your circumstances improve enough to take you above the eligibility thresholds, your DRO may be revoked and your debts reinstated

Providing false information, hiding assets, or concealing income when applying for or during a DRO is a criminal offence.

What Happens at the End of 12 Months?

At the end of the moratorium period, if your financial situation has not improved materially — you have not acquired significant assets, your income has not increased substantially — all the debts included in the DRO are written off automatically. No further action is needed. The DRO ends and you are free from those debts.

The DRO is removed from the Individual Insolvency Register three months after it ends — typically 15 months from when it started.

Which Debts Are Not Covered?

While a DRO covers most unsecured debts, the following cannot be included and will remain your responsibility even after the DRO ends:

• Student loans
• Child maintenance arrears
• Court fines and criminal fines
• Debts incurred through fraud
• Social Fund loans

Secured debts such as mortgages are also not included, though as a non-homeowner this is unlikely to affect you.

Credit File Impact

A DRO will remain on your credit file for six years from the approval date. During this time, obtaining credit or financial products will be difficult. For most people in the financial position that qualifies for a DRO, the six-year credit impact is a reasonable trade-off for the complete write-off of debts they could not otherwise repay.

DRO vs Bankruptcy — Which Is More Appropriate?

If you meet the DRO criteria, a DRO is almost always preferable to bankruptcy for people in the same situation. It is free (bankruptcy costs £680), results in the same outcome (debts written off after 12 months), and carries fewer severe consequences. Bankruptcy involves closer scrutiny of your finances, potential income payment orders if your income increases, and is a more significant legal event overall.

Bankruptcy becomes appropriate when the DRO criteria cannot be met — for example, if your debts exceed £50,000, if you own a home, or if your assets exceed the DRO thresholds.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Understanding Debt Collection — Your Rights in Plain English

When you fall behind on debt repayments, creditors have the right to pursue what they are owed. But the tactics they use to do so are tightly regulated. The difference between legitimate debt collection and illegal harassment is not always obvious to people on the receiving end — and some debt collection agencies rely on that confusion to pressure people into payments they may not legally owe or cannot afford.

This guide explains what debt collectors can and cannot legally do, the difference between different types of debt enforcement, and the specific tactics that are prohibited under UK law.

Who Regulates Debt Collection?

All debt collection firms operating in the UK must be authorised by the Financial Conduct Authority (FCA). The FCA’s rules require debt collectors to treat customers fairly, act with integrity, and not use aggressive or misleading tactics. Firms that breach these rules face fines, loss of authorisation, and regulatory action.

The Consumer Credit Act 1974 and the Administration of Justice Act 1970 provide additional legal protections. Under section 40 of the 1970 Act, it is a criminal offence to harass a debtor with demands designed to cause alarm, distress, or humiliation.

What Debt Collectors ARE Allowed to Do

Debt collectors — whether they are an in-house team at the original creditor or an external agency — have the right to:

• Contact you by letter, email, phone, or in person to request payment
• Explain the debt and the consequences of non-payment
• Offer repayment plans and negotiate payment terms
• Pass the account to another collection agency or to solicitors
• Apply for a county court judgment (CCJ) if the debt is owed and unpaid
• Instruct enforcement agents (bailiffs) once a CCJ has been obtained and payment not made

These are legitimate steps in the debt recovery process. Receiving letters and calls about a debt you owe is not harassment — it is the creditor exercising their legal right to recover money owed to them.

What Debt Collectors Are NOT Allowed to Do

The FCA’s rules and UK law prohibit a range of specific tactics. Debt collectors cannot:

• Call at unreasonable hours. Contacting you very early in the morning (before 8am) or late at night (after 9pm) is generally considered unreasonable. Multiple calls in a day, every day, is also likely to breach FCA rules on fair treatment.
• Threaten legal action they cannot or will not take. Saying “we will take you to court” when there is no intention to do so, or claiming a debt is statute-barred when it is not (or vice versa), is misleading.
• Misrepresent who they are. Pretending to be a solicitor, court officer, or bailiff when they are not is a criminal offence. Letters that are designed to look like official court documents when they are not are also illegal.
• Contact your employer or family without consent. Discussing your debt with your employer, relatives, or neighbours — except in very specific circumstances — is a serious breach of FCA rules and data protection law.
• Use threatening language. Threatening physical harm, using abusive or derogatory language, or threatening legal consequences that are clearly disproportionate to the debt are all prohibited.
• Ignore your request to stop calling. If you have asked in writing to communicate only in writing, the collector must comply.
• Chase you for a debt that is statute-barred. In most cases, if no payment has been made and no acknowledgment of the debt has occurred in the past six years (five in Scotland), the debt is statute-barred and cannot be enforced through the courts. Pursuing statute-barred debts can breach FCA rules.

Debt Collectors vs Bailiffs — A Critical Distinction

A significant source of confusion — and one that some collection agencies deliberately exploit — is the difference between a debt collector and a bailiff (enforcement agent).

A debt collector has no special legal powers. They cannot enter your home without your permission. They cannot seize your belongings. If a debt collector knocks on your door, you are not obliged to open it or speak to them.

A bailiff (enforcement agent) has specific court-granted powers to enforce particular types of debt — council tax, CCJs, HMRC debts, and court fines. Even then, their powers are strictly limited. They must give you at least seven days’ written notice before a first visit (in most cases), cannot force entry on the first visit for most debt types, cannot take protected goods (basic household essentials, work tools up to £1,350), and cannot enter if only a vulnerable person is at home.

If a debt collector claims to be a bailiff, or claims to have powers they do not have, note what was said and report it immediately.

Statute-Barred Debt — Know Your Position

Under the Limitation Act 1980, most unsecured debts in England and Wales become statute-barred after six years if no payment has been made and the debtor has not acknowledged the debt in writing. A statute-barred debt cannot be enforced through the courts, though the debt technically still exists.

If a debt collection agency contacts you about an old debt, check:

• When you last made a payment
• Whether you have written to acknowledge the debt in the past six years

If the debt is statute-barred, you can inform the collector in writing and request they stop contact. Do not make any payment or written acknowledgment of the debt without first seeking advice, as doing so can restart the six-year limitation period.

Making a Complaint About a Debt Collector

If a debt collector uses illegal or prohibited tactics, you have the right to complain:

1. Complain to the company directly — most regulated firms have a formal complaints process and must respond within eight weeks.
2. Escalate to the Financial Ombudsman Service — free to use, the FOS can require apologies, behaviour changes, and compensation.
3. Report to the FCA — reports contribute to regulatory monitoring and enforcement action against persistent offenders.

Keep records of all contact — dates, times, names, and what was said — as this will support your complaint.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Are You Being Harassed by Creditors?

Persistent calls, threatening letters, messages at work, texts at all hours — creditor and debt collector contact can quickly cross from legitimate communication into harassment. If you are feeling intimidated, distressed, or overwhelmed by the way a creditor or debt collection agency is treating you, it is important to know that there are clear legal limits on what they are permitted to do, and formal routes to make them stop.

This guide explains your rights, what legally constitutes harassment, and the concrete steps you can take to put an end to it.

The Legal Framework — FCA Regulation

All debt collectors and creditors operating in the UK are regulated by the Financial Conduct Authority (FCA). The FCA’s Consumer Duty and its debt collection guidance set out strict rules about how creditors and debt collectors must behave. These rules apply whether the debt is being chased by the original lender or by a third-party debt collection agency.

In summary, creditors and collectors must:

• Treat you fairly and with respect at all times
• Not use aggressive, threatening, or misleading tactics
• Not contact you at unreasonable times or frequencies
• Not communicate with you in a way designed to intimidate or confuse
• Give you accurate information about the debt, your rights, and what they can and cannot do
• Stop contacting you if you have requested contact only in writing

Breaching these rules is not just bad practice — it can result in formal regulatory action against the creditor and, in some cases, provides you with grounds for a legal complaint that can lead to compensation.

What Counts as Creditor Harassment?

Not all aggressive communication is technically illegal, but certain behaviours clearly cross the line. Harassment by a creditor or debt collector can include:

• Excessive contact: Calling multiple times a day, every day, or calling very early in the morning or late at night. While there is no fixed legal limit on calls, the FCA expects contact to be proportionate. Calling more than two or three times a day is likely to be considered excessive.
• Ignoring your requests: If you have asked a creditor in writing to stop calling and to communicate only in writing, they must comply. Continuing to call after this constitutes harassment.
• Contacting you at work: If you have told a creditor that you cannot take personal calls at work or that contact there is inappropriate, they should stop.
• Contacting third parties: Discussing your debt with family members, employers, neighbours, or anyone other than you (or your authorised representative) without your consent is a serious breach.
• Threats of action they cannot take: Threatening to take legal action they are not actually able to take, or implying consequences that are not real, is illegal. Common examples include falsely suggesting a debt collector has the same powers as a court bailiff, or threatening imprisonment for non-payment of non-criminal debts.
• Misrepresentation: Claiming to be a solicitor, a court officer, or a bailiff when they are not is a criminal offence under the Administration of Justice Act 1970.

Know the Difference: Debt Collectors vs Bailiffs

Many people are confused about the difference between a debt collector and a bailiff (officially called an enforcement agent). They have very different powers.

A debt collector is a company or individual who contacts you on behalf of a creditor to request payment. They have no special legal powers. They cannot enter your home without your permission, cannot seize your belongings, and cannot threaten entry. If a debt collector turns up at your door, you are under no obligation to let them in.

A bailiff (enforcement agent) is appointed by a court and has specific legal powers — but only in relation to specific types of debt (council tax, county court judgments, fines) and only after a court has issued the relevant order. Even then, their powers are limited and regulated. They must give advance notice, cannot force entry on a first visit for most types of debt, and cannot take certain protected items.

If a debt collector claims to have powers they do not have — including claiming to be a bailiff when they are not — this is illegal and should be reported immediately.

How to Document Harassment

If you believe you are being harassed, documentation is essential. Keep a detailed log of every contact:

• Date and time of each call or visit
• The name of the person who contacted you and the company they represent
• What was said — note the exact wording of any threats
• Whether you requested they stop or change their method of contact

Save any written correspondence — letters, emails, texts — without deleting anything. This evidence will support your complaint if you need to escalate.

How to Request Communication in Writing Only

If you want telephone contact to stop, write to the creditor or debt collection agency (not just say it over the phone) and state clearly that you require all future communication to be in writing only. Send this by recorded post or email so you have proof of delivery and the date. Once this request has been received, any further phone calls constitute a breach of FCA rules.

How to Make a Formal Complaint

If harassment continues after you have requested it stops, follow these steps:

1. Complain to the company directly. Most regulated creditors have a formal complaints procedure. Lodge a written complaint, referencing specific dates and incidents. They must acknowledge your complaint and respond within eight weeks.
2. Escalate to the Financial Ombudsman Service. If the company does not resolve your complaint satisfactorily within eight weeks, you can refer it to the Financial Ombudsman Service (FOS) free of charge. The FOS can require the company to apologise, change its behaviour, and pay you compensation.
3. Report to the FCA. The FCA does not investigate individual complaints but records complaints and takes enforcement action against firms with patterns of poor conduct. Reporting to the FCA adds to this record.

Practical Steps to Reduce Contact Now

While you pursue a formal complaint, these practical measures can help reduce the volume of contact immediately:

• Use a call-blocking app or your phone’s built-in blocking feature to block specific numbers
• Register your number with the Telephone Preference Service (TPS) — though this only applies to unsolicited marketing calls, not debt collection calls
• If you have a formal debt solution in place (such as an IVA or DRO), your IP or the Insolvency Service will notify creditors — legally, they must then stop contact about included debts
• Consider Breathing Space — the government’s Debt Respite Scheme — which legally requires creditors to stop contact for 60 days while you get debt advice

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

The IVA vs Bankruptcy Question

When debt becomes unmanageable and other options have been exhausted, many people face a choice between two formal insolvency solutions: an Individual Voluntary Arrangement (IVA) or bankruptcy. Both are serious legal processes with long-term consequences. Both can provide genuine relief from unmanageable debt. But they work very differently, suit different circumstances, and carry different risks and restrictions.

This guide compares the two solutions honestly to help you understand which might be more appropriate for your situation.

The Key Differences at a Glance

Before going into detail, here is a summary of the main differences:

• Duration: An IVA typically lasts five years (six for homeowners). Bankruptcy discharges after 12 months.
• Cost: An IVA has no upfront fee — IP fees are taken from within your monthly payments. Bankruptcy costs £680 to apply for.
• Home ownership: An IVA allows you to keep your home (with equity considerations). In bankruptcy, your home equity is at immediate risk.
• Income requirement: An IVA requires regular income. Bankruptcy does not — though surplus income above your needs may be claimed for up to three years after discharge.
• Debt level: IVAs have no upper debt limit. A DRO (a related option) covers up to £50,000.
• Legal status: Both are forms of insolvency and appear on the public Individual Insolvency Register.

Individual Voluntary Arrangement (IVA) — In Detail

An IVA is a formal agreement, set up by a licensed Insolvency Practitioner (IP), between you and your creditors. You agree to make affordable monthly payments over five years, and in return, creditors freeze interest and charges and agree not to take legal action. When the IVA completes successfully, any remaining included debt is written off.

For the IVA to proceed, creditors holding 75% of your debt value must vote in favour. Once approved, it binds all creditors — including those who voted against.

IVA is likely better if you:

• Own your home and want to protect it from immediate risk
• Have a regular, stable income that can support monthly contributions
• Want to avoid the severe restrictions of bankruptcy on your employment
• Have debts that are primarily unsecured and no single dominant creditor likely to veto

Bankruptcy — In Detail

Bankruptcy is a legal process in which your assets and debts are placed under the control of an Official Receiver (a government-appointed officer). The Official Receiver assesses your assets and may sell those of value to repay creditors. You are discharged — released from most of your debts — after 12 months.

Applying for bankruptcy costs £680, payable to the Insolvency Service. You apply online via gov.uk. If a creditor owed £5,000 or more petitions the court, they can make you bankrupt without your consent.

After discharge, most of your debts are written off. However, some debts survive bankruptcy — student loans, child maintenance, criminal fines, and debts from fraud cannot be included.

Bankruptcy is likely better if you:

• Do not own your home, or are prepared to lose your equity if you do
• Cannot maintain monthly IVA payments due to unstable or very low income
• Want a faster route out of debt — 12 months vs five or six years
• Have debts exceeding any DRO threshold and no meaningful income for an IVA
• Have no significant assets that would be lost to the Official Receiver

What Happens to Your Home?

This is the single most significant difference between the two options for homeowners.

In an IVA, your home is not at immediate risk. You continue to pay your mortgage. In the final year, you are typically required to explore remortgaging to release equity — but if you cannot remortgage (which is common while in an IVA), the arrangement extends by 12 months of additional payments instead. You do not have to sell your home.

In bankruptcy, any equity in your home vests in the Official Receiver on the day of the bankruptcy order. The Official Receiver has three years to deal with the property. If there is significant equity, the home may be sold. Family members living there — including children — do not automatically prevent this, though courts can take their interests into account. This is a serious risk that homeowners must weigh carefully before choosing bankruptcy.

Employment and Professional Restrictions

Both IVAs and bankruptcy carry restrictions on certain types of employment, but bankruptcy is generally more severe.

In an IVA, most employment is unaffected. However, some professions require disclosure or may have restrictions — financial services roles, solicitors, and some civil service positions may be affected. You should check your employment contract and any relevant professional body rules.

In bankruptcy, you cannot act as a company director without court permission, cannot hold certain public offices, and cannot act as a trustee or charity officer during the bankruptcy. Many financial services roles, legal roles, and civil service positions carry restrictions during and sometimes after bankruptcy.

Credit File Impact

Both an IVA and bankruptcy remain on your credit file for six years from the start date. During that time, obtaining mainstream credit or a mortgage will be very difficult. After six years, both are removed from your credit file, though you may need to rebuild your credit history regardless.

A completed IVA — where you made all your payments over five years — is sometimes viewed marginally more favourably than a bankruptcy discharge, because it demonstrates that you made a sustained effort to repay what you could. However, in practical terms, both have a similarly severe impact during the six-year period.

Income Payments During and After Bankruptcy

In bankruptcy, if you earn more than is needed for your essential living costs, the Official Receiver may require you to make contributions towards your debts through an Income Payments Order. These can last for up to three years after your discharge — meaning that although you are discharged from bankruptcy after 12 months, you may continue making payments for up to another two years.

In an IVA, your income payments end when the arrangement completes — after five or six years.

Which Should You Choose?

There is no universal right answer. The best option depends entirely on your personal circumstances: whether you own your home, your income level and stability, the nature and amount of your debts, and your employment situation.

What matters most is getting proper advice from a qualified debt adviser who can assess your full situation and explain all your options — including whether you might qualify for a free Debt Relief Order, which is a third route entirely for those with debts under £50,000 and limited income and assets.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

The Hidden Weight of Debt Shame

Debt is one of the most common financial experiences in the UK. Millions of people carry some form of debt — from credit cards and personal loans to council tax arrears and overdrafts. Yet for many people, being in debt comes with an overwhelming sense of shame, guilt, and embarrassment that is often as damaging as the debt itself.

This article is for anyone who has felt that shame. It is also for anyone who has found themselves avoiding the problem because of it — because the guilt of looking at bank statements, opening letters, or picking up the phone has become too much to bear.

Why Debt Shame Is So Common

Society tends to treat financial difficulty as a personal failing. The narrative around money often implies that people in debt have been reckless, irresponsible, or simply bad with money. In reality, the routes into debt are far more varied — and far less shameful — than this narrative suggests.

People fall into debt for all kinds of reasons:

• Job loss or redundancy
• Relationship breakdown and the financial disruption that follows
• Serious illness — their own or a family member’s — that affects income or increases costs
• The death of a partner whose income they depended on
• Business failure after years of effort
• The gradual accumulation of small debts that compound over time as interest grows
• Simply being underpaid relative to the cost of living, particularly in high-rent areas

Debt does not only happen to people who spent irresponsibly. It happens to careful, hard-working people who encounter circumstances outside their control. Understanding this does not make the debt disappear, but it is a necessary first step towards being able to address it.

How Shame Prevents People from Getting Help

Debt shame operates as a barrier in several important ways. First, it causes avoidance. Many people in serious debt stop opening their post, avoid answering phone calls from unknown numbers, and refuse to look at their bank accounts. This avoidance feels like relief in the short term but allows the situation to deteriorate in the background — interest accumulates, accounts default, creditors escalate their approach, and what might have been a manageable problem becomes significantly worse.

Second, shame prevents people from telling anyone close to them what is happening. Keeping debt secret from a partner, family members, or close friends adds an additional layer of stress and isolation. It also removes the support network that might help someone take action.

Third, shame makes people reluctant to seek professional help. The idea of sitting in front of a debt adviser and explaining the full extent of the problem — how much is owed, to whom, and for how long — feels impossibly exposing. But debt advisers are professionals who hear these stories every day. They have no interest in judging you, only in helping you find a way forward.

The Mental Health Connection

The relationship between debt and mental health is well-documented and deeply two-way. Financial stress causes anxiety, depression, poor sleep, and deteriorating physical health. At the same time, poor mental health makes managing money harder — it becomes difficult to concentrate, to make decisions, to open letters or make phone calls. The two problems reinforce each other in a destructive cycle.

If you are struggling with both debt and your mental health, it is important to seek support on both fronts. The Breathing Space scheme — a government scheme available in England and Wales — offers up to 60 days of legal protection from creditor action for anyone working with a debt adviser, and a longer, open-ended version for people receiving mental health crisis treatment. This can provide the space needed to address mental health concerns before tackling the financial ones.

Your GP can refer you to mental health support through the NHS. Many debt charities also have specialist advisers trained to support people with mental health difficulties alongside their debt problems.

Talking About Debt

Breaking the silence around debt is harder than it sounds, but often transformative. If you have a trusted person in your life — a partner, a close friend, or a family member — telling them about your situation can significantly reduce the isolation and shame you are carrying. You do not need to share every detail immediately; simply saying “I am struggling financially and it is stressing me out” is a start.

Many people who have disclosed debt problems to those close to them describe the conversation as a turning point — the moment when the problem began to feel manageable rather than overwhelming. The relief of not carrying the secret alone is often profound.

Practical Steps to Move Forward

Addressing the emotional side of debt shame matters, but the most powerful thing you can do is take concrete action. Action — however small — breaks the cycle of avoidance and begins to restore a sense of control.

Start with these steps:

• Write down what you owe. This sounds simple, but it is a step many people avoid for months or years. Knowing the full picture — amounts owed, to whom, and at what interest rate — is the foundation for any plan.
• Create a basic budget. List your income and your essential outgoings. This tells you what you have available to address the debts and which ones need prioritising.
• Separate priority debts from non-priority debts. Council tax, rent or mortgage, energy bills, and court fines are priority debts because the consequences of not paying them are more severe (bailiffs, eviction, disconnection). Credit cards and personal loans are non-priority — serious, but less immediately dangerous.
• Contact your creditors. This feels frightening, but many creditors are more willing to negotiate than people expect. Explaining your situation and proposing a realistic payment plan is almost always better received than silence.
• Get professional debt advice. A free, regulated debt adviser will review your situation without judgment and help you understand which solution — whether informal arrangements, a Debt Management Plan, an IVA, a DRO, or something else — is most appropriate.

You Are Not Alone, and It Is Never Too Late

Whatever stage your debts have reached — early arrears, multiple defaults, bailiff letters, or something even more serious — there are solutions available. The UK debt advice sector exists precisely to help people in exactly these situations, and a great many people who have been through severe financial difficulty have come out the other side with their finances and their lives rebuilt.

Seeking help is not an admission of failure. It is the first act of taking control.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Missing IVA Payments — What Happens Next?

An Individual Voluntary Arrangement (IVA) is a formal, legally binding commitment. You agree to make monthly payments to your Insolvency Practitioner (IP) over five or six years, and in return your creditors agree to freeze interest and charges and accept reduced payments. When everything goes to plan, the IVA completes and remaining debts are written off.

But life does not always go to plan. What happens if your circumstances change and you can no longer keep up with your IVA payments?

What Happens If You Miss a Payment?

Missing a single payment does not automatically terminate your IVA. However, your IP will be alerted when a payment is missed and will make contact with you to find out why. This initial contact is important — do not ignore it.

The first step your IP will take is to understand the reason for the missed payment. If it is a temporary issue — a short delay in your salary, a one-off unexpected expense — your IP may allow you to make up the missed payment over the following months without any formal action being taken.

If you miss payments repeatedly or without explanation, the situation becomes more serious. Most IVA terms allow a certain number of missed payments — typically up to two or three — before the IP is obliged to take formal action. Beyond that threshold, the IP has a duty to consider terminating the arrangement.

Can an IVA Be Modified?

Yes — and this is one of the most important things to understand. An IVA is not completely rigid. If your circumstances change in a significant way that makes your current payment level unsustainable, your IP can apply to your creditors for a variation to the IVA.

A variation is a formal modification to the arrangement. It might reduce your monthly payments, extend the length of the IVA, or adjust the terms in other ways to reflect your changed circumstances. Creditors holding 75% of the debt value by value must agree to any variation, just as they agreed to the original IVA.

Common circumstances that might lead to a variation include:

• Redundancy or a significant reduction in income
• Long-term illness or disability that affects your ability to work
• The birth of a child or a significant increase in household expenses
• A relationship breakdown that changes your financial position

The key is to contact your IP as soon as you know your circumstances are changing — before you start missing payments, if possible. Early communication gives the best chance of a successful variation.

What Is a Payment Break or Payment Holiday?

Some IVA agreements include a provision for a short payment break — typically one to three months — in cases of genuine temporary hardship. Not all IVAs include this, and it is not automatic. Your IP will need to agree to it and may need to notify your creditors.

A payment break does not cancel those months — the missed payments are usually added to the end of the IVA, extending its length accordingly. It is a temporary solution for a temporary problem, not a way to reduce the total amount paid into the arrangement.

What Happens If the IVA Fails?

If no variation can be agreed and you are unable to maintain payments, your IP may issue a certificate of termination. This formally ends the IVA. There are serious consequences to understand:

• Your debts return to their original position. All the debts that were included in the IVA — including any that have been partially repaid — return to their pre-IVA status. Interest and charges that were frozen during the IVA may also be reinstated.
• Creditors can take action again. Once the IVA is terminated, creditors are free to pursue you for the full outstanding amounts, seek county court judgments, and instruct bailiffs.
• The IVA still appears on your credit file. A failed IVA will be recorded on your credit file for six years from the start date, with a note that the arrangement was not completed. This is more damaging than a completed IVA.
• Bankruptcy is often the next step. In many cases, a failed IVA leads to bankruptcy — either because your creditors petition for it or because you apply for it yourself as the only remaining option. It is important to get debt advice immediately if your IVA fails, before creditors begin enforcement action.

How to Avoid IVA Failure

The most important thing you can do is maintain open communication with your IP throughout the IVA. If you anticipate problems, contact them before you miss payments. Most IPs would rather negotiate a variation than deal with a termination — it is in nobody’s interest for the arrangement to collapse.

Practical steps to reduce the risk of IVA failure:

• Build a small emergency fund if your IVA budget allows — even a few hundred pounds can help absorb an unexpected bill without missing an IVA payment
• Review your budget carefully each time your IP requests an annual review — flag any changes in income or expenditure promptly
• If you are in a job where your income might be cut or lost (for example, contract work or a struggling business), consider this when deciding whether an IVA is suitable before entering one
• Declare any windfalls or significant income increases immediately — attempting to conceal them is a serious breach of IVA conditions and can lead to termination and potentially criminal proceedings

What If You Are Already in Difficulty?

If your IVA is already in trouble — you have missed payments, you have received a warning from your IP, or you know your circumstances are not sustainable — take action immediately. Contact your IP and explain the situation honestly. Do not wait until payments have been missed for several months.

If your IP is not responsive or you feel you need independent guidance, seek advice from a regulated debt adviser who can assess your situation and advise on your options, including whether a variation, a payment break, or an alternative solution might be available.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Getting a Mortgage After an IVA — Is It Possible?

Completing an Individual Voluntary Arrangement (IVA) is a significant achievement. After five or six years of managed payments and financial discipline, you deserve the fresh start that completing an IVA is meant to deliver. One of the most common questions from people who have finished — or are nearing the end of — an IVA is whether they can ever get a mortgage.

The straightforward answer is: yes, it is possible to get a mortgage after an IVA. But it is not simple, and it requires patience, realistic expectations, and a deliberate plan to rebuild your credit profile.

How Long Does an IVA Stay on Your Credit File?

An IVA appears on your credit file for six years from the date it started — not from when it ended. This means that if your IVA started in 2020 and ended in 2025, the record will be removed from your credit file in 2026. At that point, the IVA will also be removed from the publicly searchable Individual Insolvency Register (three months after completion).

During those six years, most mainstream lenders will decline mortgage applications outright. The further you move from the start date of your IVA, the better your chances, even while the record still appears.

Mortgage Options While the IVA Is Still on Your Credit File

If the IVA is still showing on your credit report, mainstream high-street lenders are very unlikely to approve a mortgage application. However, there is a specialist mortgage market that caters specifically for people with adverse credit history, including IVAs.

Specialist or adverse credit lenders assess applications on a more detailed basis than mainstream banks. They look at factors including:

• How long ago the IVA started and whether it has been completed
• Whether you have maintained payments during the IVA without defaults
• Your current income and its stability
• How much deposit you can put down
• Any other adverse credit markers on your file since the IVA started

As a general rule, the larger your deposit, the better your chances with specialist lenders. Deposits of 25% to 30% or more are often required to access the better specialist mortgage rates. The rates themselves will be higher than mainstream mortgage deals, reflecting the perceived risk.

Getting a Mortgage After the IVA Drops Off Your Credit File

Once the six-year period has passed and the IVA is removed from your credit file, your options open up considerably. You will no longer need to declare the IVA to most lenders, and you can apply to mainstream mortgage lenders on the same basis as any other applicant.

At this point, what matters is the credit profile you have built in the years since the IVA ended. Lenders will want to see:

• A consistent record of paying bills and credit commitments on time
• Responsible use of credit (for example, a credit card that you clear in full each month)
• Stable employment and income history
• No County Court Judgments (CCJs) or other adverse markers in recent years
• A reasonable debt-to-income ratio

Steps to Improve Your Mortgage Chances After an IVA

Regardless of where you are in the post-IVA timeline, the following steps will help improve your chances of getting a mortgage:

1. Check and Monitor Your Credit Reports

Obtain your credit reports from all three main agencies — Experian, Equifax, and TransUnion — and review them carefully. Once the IVA end date plus three months has passed, check that the IVA has been removed from all three reports. Errors on credit files are not uncommon and can significantly affect your score; if you spot any inaccuracies, raise a dispute with the relevant agency.

2. Build a Positive Credit History

You can start rebuilding your credit history during and after the IVA. A credit builder card — where you spend a small amount each month and pay it off in full — demonstrates responsible use of credit and creates a positive payment record. Ensure all your regular bills (utilities, phone, broadband) are paid on time and in full, as these can be registered on your credit file.

3. Register on the Electoral Roll

Being registered on the electoral roll at your current address is one of the simplest steps you can take to improve your creditworthiness. Many lenders use this to verify your identity and address stability.

4. Save the Largest Deposit You Can

A larger deposit reduces the lender’s risk and improves your chances of approval. It also means borrowing less, which results in lower monthly payments and potentially access to better rates. Even while in an IVA, if there is any capacity to save — perhaps towards the end of the arrangement — doing so will pay dividends when you apply for a mortgage.

5. Work With a Specialist Mortgage Broker

A mortgage broker who specialises in adverse credit and post-IVA applications will know which lenders are most likely to consider your application and in what circumstances. Going directly to lenders and being declined multiple times can further damage your credit score. A broker can guide you to the right lender first time, making soft enquiries rather than leaving hard footprints on your file.

Typical Timelines

While every situation is different, here is a general guide to what you might expect:

• During the IVA: Extremely unlikely to get a mainstream mortgage. Some specialist lenders may consider it in very limited circumstances with a very large deposit.
• 1–3 years after IVA completion (record still on file): Specialist lenders may consider applications, particularly with a 25%+ deposit and a clean payment record since the IVA started.
• After the credit file record is removed (6 years from start date): Mainstream lenders become accessible. Your success will depend on the credit history you have built in the intervening years.

What About an IVA Mortgage During the Arrangement?

If you are a homeowner already in an IVA, your existing mortgage is not automatically affected — you continue to make your mortgage payments as normal outside the IVA. If you wish to remortgage during an IVA (not in the final year equity release process), you should speak to your Insolvency Practitioner first, as any changes to your financial circumstances need to be disclosed and approved.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Understanding the IVA Decision

An Individual Voluntary Arrangement (IVA) can be a life-changing solution for people struggling with unmanageable debt. But like all formal debt solutions, it comes with significant advantages and equally significant drawbacks. Understanding both sides in detail is essential before committing to a legally binding arrangement that will last five or six years.

This guide examines the IVA pros and cons honestly, without sugarcoating either side of the picture.

The Advantages of an IVA

1. Legal Protection from Creditors

Once an IVA is approved, it becomes legally binding on all your creditors — even those who voted against it. From that point, your creditors cannot add interest or charges to the included debts, cannot take legal action against you, cannot instruct bailiffs, and cannot contact you directly about the debts. All contact goes through your Insolvency Practitioner. The immediate relief from creditor pressure is one of the most significant practical benefits for people who have been dealing with constant harassment and threatening letters.

2. Remaining Debt Is Written Off at Completion

When you successfully complete your IVA — making all your agreed monthly payments over the full term — any remaining unsecured debt included in the arrangement is legally written off. You will not owe the balance. For people with large unsecured debts relative to their income, this write-off can amount to tens of thousands of pounds that they would never realistically have been able to repay in full.

3. A Single Affordable Monthly Payment

Your IVA payment is calculated based on what you can genuinely afford after covering all your essential living costs — rent or mortgage, food, utilities, transport, clothing, and other reasonable expenses. The IP works out a surplus income figure and bases the monthly contribution on that. You make a single payment each month to your IP, who distributes it amongst your creditors. No more juggling multiple payments to multiple creditors.

4. Your Home Is Not Automatically at Risk

Unlike bankruptcy, entering an IVA does not put your home at immediate risk. If you are a homeowner, you can typically remain in your property and continue making your mortgage payments as normal. The equity in your property will be considered in the final year — you may be asked to remortgage to release some equity — but you will not be forced to sell your home to pay creditors, as might happen in bankruptcy.

5. Creditors Must Accept the Outcome

Once 75% of the debt value votes in favour, the IVA binds all creditors — even dissenting ones. This is a significant legal mechanism that protects you from a minority of creditors continuing to pursue you while others have accepted the arrangement.

6. Professionally Supervised Process

Your Insolvency Practitioner acts as an impartial supervisor throughout the arrangement. They ensure the IVA runs correctly, handle creditor queries, manage annual reviews, and protect your interests within the framework of the law. This professional oversight provides structure and accountability on both sides.

The Disadvantages of an IVA

1. Long-Term Commitment — Five to Six Years

An IVA typically lasts five years, or six years if you are a homeowner and the equity release clause applies (or if you cannot remortgage in the final year). That is a significant period during which your finances are constrained, your spending is monitored, and you must make consistent monthly payments. Life can change a great deal in five years — job losses, illness, relationship breakdown — and these changes can put the arrangement under serious strain.

2. Impact on Your Credit File for Six Years

An IVA is recorded on your credit file for six years from the date it starts. During that time, obtaining credit, a mortgage, or many financial products will be extremely difficult. You will typically be restricted to specialist lenders with higher interest rates. Even after the IVA is completed and removed from the register, the credit file record remains for the full six-year period from the start date.

3. Strict Budget and Spending Restrictions

During an IVA, you must live within a carefully managed budget. You cannot take on new credit of £500 or more without informing the lender that you are in an IVA. Any significant increase in your income may trigger a revision of your monthly payment upward. Annual reviews are thorough — you will need to submit payslips, bank statements, and a full account of your income and outgoings each year.

4. 75% Creditor Approval Is Not Guaranteed

An IVA only proceeds if creditors holding 75% or more of your total debt value vote in favour. While most IVA proposals that reach the creditors’ meeting are approved, rejection is possible — particularly if your largest creditors feel the proposal does not offer them enough. If the IVA fails at this stage, you will need to explore other options.

5. Fees Are Substantial

IVA fees are paid from within your monthly contributions rather than added on top, but they are still substantial. Total fees across the life of an IVA can range from £3,000 to £10,000 or more. This means a portion of every monthly payment you make goes to your IP rather than directly reducing your debts. Fees must be fully disclosed before you sign anything — always read the proposal carefully.

6. Equity Release in the Final Year

If you are a homeowner, in the final year of your IVA you will typically be required to obtain a valuation and explore remortgaging to release equity. If equity exists and you can remortgage, some of it will need to be paid into the arrangement. If you cannot remortgage — common because of the impact on your credit — the IVA will be extended by 12 months of additional payments instead. This is worth understanding clearly before you start.

7. Failure Has Serious Consequences

If an IVA fails — because payments stop, circumstances change dramatically, or the arrangement collapses — the debts return to their original position. Creditors can resume action, and bankruptcy often follows. Entering an IVA with an unstable income or unrealistic payment commitments significantly increases the risk of failure.

Is an IVA the Right Choice for You?

An IVA tends to be most appropriate for people who:

• Have multiple unsecured debts totalling roughly £6,000 or more
• Have a regular, reliable income with genuine surplus after essential costs
• Want to avoid bankruptcy and protect their home
• Accept the commitment of five or six years of managed finances

It is less likely to be appropriate if your income is unpredictable, your debts are primarily secured, you might qualify for a free Debt Relief Order, or you could realistically repay your debts within a few years through a Debt Management Plan.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.

Updated for 2026

What Is the Breathing Space Scheme?

The Breathing Space scheme — officially called the Debt Respite Scheme — is a government initiative that gives people struggling with problem debt a temporary period of legal protection from creditor action. During this protected period, most creditors must stop adding interest and charges to your debts, pause enforcement action, and stop contacting you about repayment.

The scheme was introduced in May 2021 and continues to help thousands of people across England and Wales each year. It is not a debt solution in itself — it does not write off or reduce what you owe — but it provides vital breathing room so you can get proper debt advice and explore which solution is right for your situation, without the constant pressure of creditor contact and escalating balances.

The Two Types of Breathing Space

There are two distinct types of breathing space available, depending on your circumstances:

Standard Breathing Space

This is available to anyone in problem debt who is working with a registered debt adviser. It provides up to 60 days of legal protection from most creditor action. During this period:

• Interest, fees, and charges on qualifying debts must be frozen
• Most enforcement action — including bailiff visits and new court proceedings — must be paused
• Creditors must stop contacting you about the included debts
• New county court judgments cannot be sought for qualifying debts

Mental Health Crisis Breathing Space

This is available to people who are receiving mental health crisis treatment. It lasts for the full duration of your crisis treatment, plus 30 additional days. There is no upper time limit — it continues for as long as you remain in crisis treatment. This recognises that people in a mental health crisis are particularly vulnerable and need extended protection from financial pressure.

The same protections apply as with standard breathing space, but the duration can be significantly longer depending on how long the mental health treatment continues.

Who Can Use Breathing Space?

To be eligible for standard breathing space, you must meet the following conditions:

• You must be an individual (not a business) living in England or Wales
• You must have at least one qualifying debt that you are struggling to repay
• You must not already be in a current insolvency procedure — this includes an active IVA, Debt Relief Order, or undischarged bankruptcy
• You must not have had a standard breathing space in the previous 12 months (this 12-month restriction does not apply to mental health crisis breathing space)

You cannot apply for breathing space directly. It must be applied for on your behalf by a registered debt adviser at an FCA-authorised organisation. This ensures the scheme is used by people who genuinely need it and are engaging with the debt advice process.

How to Apply for Breathing Space

The process is straightforward once you engage with a debt advice provider:

1. Contact a debt advice service. Reach out to a free, regulated debt advice organisation. They will assess your financial situation and determine whether breathing space is appropriate for you.
2. Your adviser registers the breathing space. If you are eligible, your debt adviser submits the application electronically on your behalf. Your creditors are notified and the protections begin immediately.
3. You engage with the advice process. During the breathing space period, you must continue to work with your adviser. If you stop cooperating, the breathing space can be cancelled early.

The whole process is handled by your adviser, so you do not need to contact your creditors yourself at any point.

What Is Protected — and What Is Not?

Most personal unsecured debts can be included in a breathing space, including credit cards, personal loans, overdrafts, council tax arrears, utility bill arrears, rent arrears (in most cases), and hire purchase debts. The protections apply specifically to the debts included in your breathing space.

Certain debts and obligations are not covered by breathing space:

• Ongoing liability for council tax for the current year (though council tax arrears can be included)
• Court fines and criminal fines
• Child maintenance payments
• Student loans

Your adviser will be able to confirm exactly which of your specific debts qualify and which do not.

Your Responsibilities During Breathing Space

Breathing space is not a holiday from your finances. You have ongoing responsibilities during the protected period:

• You must continue to pay your ongoing bills as they fall due — breathing space does not pause your regular outgoings such as rent, mortgage payments, or utilities for the current period
• You must engage with your debt adviser and cooperate fully with the advice process
• You must inform your adviser of any significant change in your circumstances

If you fail to cooperate with your debt adviser, they can cancel the breathing space before the 60 days are up. This is rare, but it is important to stay engaged throughout the process.

What Happens After the 60 Days?

The breathing space period gives you protected time to explore your debt solution options with the help of your adviser. During those 60 days, your adviser should work with you to identify the most appropriate route forward — whether that is a Debt Management Plan, an IVA, a Debt Relief Order, or another solution.

At the end of the breathing space, the protection from creditor action ends. If no longer-term solution has been put in place, creditors can resume contact and enforcement. This is why it is crucial to use the 60 days productively by genuinely engaging with your adviser and making progress towards a plan.

For many people, breathing space acts as the gateway to a formal debt solution. For others, it provides enough time to negotiate directly with creditors and arrange manageable repayments informally.

Breathing Space and Mental Health

The mental health crisis breathing space is a particularly important provision for people at their lowest point. Financial stress and mental health problems frequently go hand in hand, and the cycle of creditor contact, threatening letters, and enforcement action can make it extremely difficult for someone in crisis to take positive steps.

If you are receiving crisis care from a mental health professional and you have problem debts, ask your doctor, nurse, or care coordinator whether mental health crisis breathing space might be appropriate. Your mental health care team or a debt adviser working with mental health services can help arrange this.

Is Breathing Space Right for You?

Breathing space is worth considering if you:

• Are being contacted by multiple creditors and feeling overwhelmed
• Are facing imminent enforcement action such as bailiffs or a county court judgment
• Need time to seek proper debt advice without the pressure of escalating interest and charges
• Are in a mental health crisis and need extended protection while receiving treatment

It is also worth knowing what breathing space will not do. It will not write off your debt, reduce your balances, or resolve your debt problem on its own. But as a protective breathing space — a pause that allows you to get organised, take advice, and plan — it can be an invaluable first step.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

Check Your Options Now

For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.