Debt arises when one struggles to keep up with day-to-day expenses, such as utility bills, credit card dues, loan repayments, rent and mortgage payments. While a small amount is often manageable, mounting liabilities may require additional support to help pay off debt. This is where debt assistance and clearance services come into play. These services aid in repaying debts. In addition to utilizing these services, one can take various steps to reduce their financial burden.

1. Determine the total debt
To begin tackling mounted debts, start by calculating the total amount owed, to whom it is owed and the required monthly payments.

2. Consult a debt adviser
In order to avoid falling further into debt, it is best to address the financial difficulties at the earliest .

• Maintain confidentiality and privacy
• Not judge a client’s financial choices
• Recommend measures to deal with debt
• Verify whether a person has applied for the various benefits and entitlements

3. Take advantage of “breathing space ”
Individuals seeking guidance from a debt adviser have the option to request a “breathing space,” a legal protection provided by the government for those struggling with debt. With this, an individual is allowed to temporarily halt enforcement actions, which provides them with extra time to seek debt advice and negotiate repayment plans. This formal and legal framework offers a 60-day standard breathing space during which creditors are required by law to cease actions such as bailiff actions, court actions and debt collection calls. In order to be eligible for this period, individuals must seek consultation from an approved debt adviser, who will assess their debt situation and apply for breathing space on their behalf. This space covers most types of debt, including utility bills, personal loans and credit card debt, but it does not typically cover debts like student loans and court fines.

4. Start paying off the debt
An efficient way to pay off debt is to first identify the most critical ones . Focus on settling urgent debts such as mortgage repayments, rent, or loans secured on a house, electricity and gas bills, income tax, council tax, VAT and other related taxes, court fines and TV license payments. These are considered priority bills since failing to pay them can have serious consequences, such as foreclosure on the house or payments for court-imposed fines.

Once these urgent debts are taken care of, move on to other important ones such as store card and credit card debts, buy-now-pay-later payments, pay-day loans, unsecured loans, water bills and overdrafts. Delaying payments for these can lead to rapidly increasing costs. So, aim to make at least the minimum payments on each of these to prevent default charges. Once this is done, focus on paying off the debt with the highest interest rate or borrowing cost.

5. Clear debts through instalments
When in debt, settling the entire amount in one go may not be feasible. Making payments in instalments can be a practical solution in such circumstances. There are various methods to achieve this, such as debt management plans, administration orders and individual voluntary arrangements.

• Debt management plan
  This is useful for managing non-priority debts like store card or credit card debt, overdrafts, and personal loans. Managed by a Debt Management Plan or DMP facilitator, this plan involves drawing up an agreement with various creditors to pay back the debt at affordable rates through one monthly payment.
• Administration order
  This can be used when there is a High Court judgment (HCJ) or a county court judgment (CCJ) against the person for debts below £5,000.
• Individual voluntary arrangement
  This is facilitated by an insolvency practitioner, who allows a person to pay back what they can afford over a fixed period, like five to six years. Any debt that hasn’t been paid off by the end of this period is written off. That said, this agreement is legally bound by stringent penalties in the case of cancellation.