A UK Guide to Managing Debt: Help, Tips, and Tools to Regain Control
 

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1. Understanding Debt in the UK

2. Practical Ways to Manage Debt

3. Free Credit Score Apps to Monitor Your Finances

4. Debt Relief Options: DROs, CCJs, and Bankruptcy

5. Where to Find Free Debt Help

6. My Top Tips for Tackling Debt
    

Understanding Debt 
 

Debt is a reality for millions of people across the UK. Whether it’s credit card debt, personal loans, or overdue bills, financial struggles can feel overwhelming. The good news? You’re not alone, and there are practical steps you can take to regain control.

In this guide, we’ll explore ways to manage debt, free tools to monitor your credit score, and the formal debt relief options available in the UK, such as Debt Relief Orders (DROs), County Court Judgments (CCJs), and bankruptcy. We’ll also share real-life examples and links to free resources to help you on your journey.
 

Practical Ways to Manage Debt
 

1. Create a Budget
   Start by tracking your income and expenses. Use a budgeting app like Money Dashboard or Yolt to see where your money is going and identify areas to cut back.
    

2. Prioritise Your Debts
   Focus on high-interest debts first (like credit cards) while making minimum payments on others. This is known as the avalanche method. Alternatively, the snowball method involves paying off smaller debts first to build momentum.
    

3. Negotiate with Creditors
   If you’re struggling to make payments, contact your creditors. Many are willing to offer reduced payments, interest-free periods, or extended repayment terms.
    

4. Consider a Debt Management Plan (DMP)
   A DMP is an informal agreement with creditors to pay back your debts at a rate you can afford. Organisations like StepChange can help set this up for free.
    

Free Credit Score Apps to Monitor Your Finances 
 

Keeping an eye on your credit score can help you understand your financial health and spot any errors.
 

• What they do: Credit report apps provide a snapshot of your credit score and detailed reports on your financial behaviour.

• How it helps: By regularly checking your credit report, you can see how your debt is affecting your credit score and identify areas for improvement. For example, if you notice missed payments or high credit utilisation, you can take steps to address these issues.

• These apps highlight any inaccuracies in your credit report, such as incorrect balances, accounts you don’t recognise, or fraudulent activity and errors on your credit report can harm your score and make it harder to access credit or negotiate with creditors. By spotting and disputing these errors, you can improve your creditworthiness and avoid paying for debts that aren’t yours.
   

Here are some free UK-based apps:

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• ClearScore: Offers free credit reports and personalised tips to improve your score. Visit ClearScore

• Credit Karma: Provides free credit scores and insights into your financial behaviour. Visit Credit Karma

• Experian: Access your Experian credit score for free and get tailored advice. Visit Experian
   

Debt Relief Options: DROs, CCJs, and Bankruptcy 
 

If your debt feels unmanageable, there are formal solutions available. Each option has pros and cons, so it’s important to seek advice before making a decision.
 

1. Debt Relief Orders (DROs)
 

• What is it? A DRO is a way to write off debts if you have a low income, minimal assets, and owe less than £30,000 (as of 2023).

• Pros: Freezes interest and charges, and debts are written off after 12 months if your situation doesn’t improve.

• Cons: It will affect your credit rating for six years, and you can’t apply if you own a home or have significant savings.

• Learn more: Citizens Advice on DROs
   

2. County Court Judgments (CCJs)
 

• What is it? A CCJ is a court order requiring you to repay a debt. If you pay the full amount within a month, it won’t appear on your credit file.

• Pros: Can be a wake-up call to address debt and negotiate repayment plans.

• Cons: Stays on your credit file for six years, making it harder to borrow money.

• Learn more: National Debtline on CCJs
   

3. Bankruptcy

I write this as someone who had to go bankrupt to clear their debts. It is a very daunting and potentially scary option, and for some a risky move, especially if you have assets such as a house, expensive car etc, but for others, such as myself, who had pretty much nothing my name with anything, it can be a really good way to get debts written off. However, it does totally screw up your ability to get credit, and even things such as cheaper car insurance, even jobs in some cases, but if you have no chance of being able to pay off what you owe, then it's probably your best option. It takes 6 or 7 years to get back to the place where your credit rating hasn't been destroyed, but you do get there, and it does get better. I've written about my bankruptcy store in this post.
 

• What is it? Bankruptcy is a legal process that writes off most debts if you’re unable to repay them.

• Pros: Stops creditor action and gives you a fresh start after one year.

• Cons: You may lose assets (like your home), and it stays on your credit file for six years.

• Learn more: GOV.UK on Bankruptcy
   

Where to Find Free Debt Help
 

• StepChange: Free debt advice and DMPs. Visit StepChange

• National Debtline: Free, confidential advice. Visit National Debtline

• Citizens Advice: Guidance on debt and money issues. Visit Citizens Advice

• MoneyHelper: Government-backed financial guidance. Visit MoneyHelper

• Facebook! Yup, I know that sounds weird, but there are many support groups on Facebook that can help you. They are run by knowledgeable and experienced people who can offer support and advice. You can post anonymously if yopu prefer. This group is the one I'd recommend. (link opens in Facebook)
   

My Final Tips for Tackling Debt 

I'm giving this advice from my personal experience, and having learned the hard way, this isn't generic advice; it's genuine advice that I wish I'd listened to! 
 

• Please don’t ignore the problem: The sooner you address debt, the easier it is to manage. Burying your head in the sand doesn't work! It'll eat away at you, and it'll be the last thing you think about when falling asleep, and the first thing you think about when you wake up! Get in touch with the people you owe money to and explain the situation. If there really aren't any options, look at more serious financial resolutions such as DROs and bankruptcy. Realistically, if you have no chance of being able to pay off your debts, then this is the only way out of the issue; it'll suck for a few years in regards to your credit, and does have serious implications if you hold assets, but it does deal with your immediate financial issues, and it does get better. I'm 7+ years in, my bankruptcy is gone, and my credit score has now gone from poor to excellent, and I sleep at night and don't jump when the doorbell goes or my phone rings; no more debt collectors or stress.

• Seek help early: Free debt advice services are available to support you. Speak to the people you owe money to and ask for some breathing room or a payment plan you can afford. Be ready with an income and expenditure report to show them what you have coming in and what's going out; this shows them what you can and, more importantly, what you can't afford to pay them.

• Stay informed: Regularly check your credit score and review your budget. Keep your eye out for any issues and deal with them as quickly as possible! 

• Be patient: Getting out of debt takes time, but every small step counts.
  
  Please remember I'm not a trained financial advisor and have no legal training, so always check with someone qualified before making big decisions about your debt!