Being in debt can be stressful and overwhelming, but there are practical steps you can take to regain control. National Debtline have been helping manage their debts for over 30 years. Millions of people in the UK have financial difficulties. But there are solutions. If you need a fresh start, there are ways to get one.
In this article, we’ll give you a step-by-step guide to taking back control of your finances and tell you about the solutions you can use to deal with your debts.
How to manage debt when you feel overwhelmed
By reading this article, you’re taking the first step towards a fresh start with your finances. We know that being in debt can be tough. It can sometimes feel like too much, but there are solutions. You can call National Debtline for free impartial debt advice. An adviser will tell you how to deal with your debts and help you find your best solution.
We’ll talk you through all the steps you need to take. But you don’t have to do everything at once. Do what works for you. The most important thing is that you keep going.
How to work out exactly how much debt you have
Sometimes seeing how much you owe is scary. Opening your letters doesn’t change how much you owe. But it is a key step in taking control of your situation. If looking at letters about your debts makes you feel uneasy, remind yourself that you are making a positive change to your money situation. You could also ask someone that you trust to open your letters with you.
If you haven’t kept the letters from your creditors, or need more up-to-date figures, contact your creditors and ask them how much you owe. If you would prefer not to speak to them on the phone, send them an email or letter instead.
If you speak to your creditors about what you owe, do not agree to a payment arrangement. It is important that you only offer what you can afford to pay. You won’t know what this is until you’ve had advice.
If you’ve lost track of who you owe money to, getting copies of your credit reference files may help. There are three main credit reference agencies. They may each hold different information about you.
The websites for the credit reference agencies are:
Experian – www.experian.co.uk;
Equifax – www.equifax.co.uk; and
TransUnion – www.transunion.co.uk.
Do not pay for a credit report. Ask for your free statutory credit report or call us for advice about other ways to get this information for free. Read our Credit reference agencies guide to find out more about credit reports.
If you haven’t been in contact with your creditors for some time, you may find that they will start to contact you again once you have asked for a credit report. If you haven’t made any payments towards a debt for several years, call for advice about time limits for debts before asking for a credit report.
How to budget and manage debt payments
An accurate budget is the starting point for dealing with your debts.
You won’t be able to choose a solution to deal with your debts without a budget. All advice agencies will expect you to do a budget before they can discuss your options. Your creditors will also ask for one. It shows you:
- what money you have coming in (your income);
- what money you are spending (your outgoings);
- whether you have enough money to pay your essential bills; and
- what is available, if anything, to pay your debts.
This information helps you to find the best solution to deal with your debts.
It also allows you to:
- plan for future spending; and
- protect yourself against the stress that unexpected bills or increased costs can cause.
Read How to do budget planning: a simple guide to managing your money article to find out more about filling in your budget. Use My Money Steps to create a budget and get advice about your spending.
Which debts should you pay first?
If you haven’t got enough money left over to pay your debts, you’ll need to work out reduced payments based on what you can afford. Speak to an adviser first so they can help you check your budget. They’ll let you know if any spending is too high or too low.
Debts are split into two groups.
Priority debts are dealt with first. This is because creditors collecting priority debts have stronger powers to recover debts than non-priority creditors. Examples of priority debts include arrears (missed payments) on your mortgage or rent, gas, electricity and council tax. This is because you could lose your home or an essential service if you don’t deal with the debt.
Non-priority creditors have the same powers to collect a debt as you do. They can ask you to pay. They should not threaten or harass you. They can ask a debt collector to chase the debt, but they have no extra powers either. Read our How to deal with debt collectors article to find out more. As a last resort, a non-priority creditor may be able to make a court claim for the debt. Read our County Court Judgments (CCJs): Enforcement, Removal, and What You Need to Know article to find out more. A court can still give you time to pay the debt if they think you are making a fair offer to pay. But by using your budget to work out fair payments, or by choosing a suitable debt solution, you are aiming to keep things out of court.
If you make reduced payments on your debts, this could be recorded on your credit reference files. Read our Credit reference agencies guide to find out more.
Some debts can be priority or non-priority depending on the circumstances. If you’ve completed your budget, get advice about how to prioritise your debts and how to work out offers. If you prioritise the wrong debts, this can make it harder to get your offers accepted. In some cases, it could also cause serious legal issues or create problems for certain debt solutions. You can get free professional advice from a National Debtline adviser to make sure you’re prioritising the right debts.
How to deal with creditors when you cannot afford payments
You can’t keep making payments if you cannot afford them. It can be tempting to borrow more money to keep things going. But unless you know that either your income is going to increase or your costs are going to reduce, this is going to take you further into debt. And at some point, you will run out of credit.
Use your budget to work out what you can afford to pay. Any offers you make are going to be based on this. If you offer to pay more than you can afford, you are not going to be able to stick to it.
How to make a debt repayment plan
If you need to offer reduced payments, get a safe bank account set up. A safe bank account is an account with a bank that you do not owe any money to. Banks have the right of set-off. This means that if you owe them money, they can take payments for your debts from your account without asking. Read our Safe bank accounts guide to find out more.
You should use any money that is left over after paying your living expenses to pay priority debts first. Call National Debtline to get advice about making fair offers on your priority debts. Any money that is left over after this should be used to pay your non-priority debts. There are different ways to split the money depending on how much is left over. It is very important that you treat your creditors fairly though.
If you have enough money left over, you should make pro-rata offers on your non-priority debts. This means that creditors get different amounts based on how much money is owed to them. So, if a loan made up 50% of the total amount you owe, you would pay 50% of the money you have left over for non-priority debts towards this.
If you have little or no money left over for non-priority debts, you could make token offers instead. With a token offer, you would pay the same small amount on all non-priority debts each month. For example, a token offer could be £5 each or even £1 each.
You can negotiate with your creditors yourself. Speak to an adviser first so they can check your budget and help you work out fair offers of payment.
If you prefer, you may be able to set up a debt management plan (DMP) instead. This is where a company negotiates reduced payments on your debts for you. You can usually only include non-priority debts in a DMP. We only recommend using free debt management providers. If you pay fees for a service, this uses money that could be used to repay your debts more quickly instead. Read our Debt management plans guide to find out more. If you call for advice, an adviser can let you know if a free DMP is a good solution for you and help you get one set up.
How to get out of debt faster
If you can’t afford the payments on your debts and it will take you a long time to repay them, there may be other options.
These could include the following debt solutions.
The best solution for you will depend on your circumstances and how much money (if any) you have left over to pay towards your debts. A National Debtline adviser will let you know which solutions are available to you and recommend the best one.
There are lots of debt solutions that could help you manage debt. For an overview of all the debt solutions that could be available, see our Ways to clear your debt guide.
Common mistakes to avoid when managing debt
Here are three key tips for dealing with your debts.
- Fill in an accurate budget and update it regularly. There is no point setting up agreements you can’t afford to keep.
- Be careful when choosing a debt solution. Some companies may try to sell you a debt solution that isn’t a good fit for you. Always get free independent debt advice first.
- Keep going. If you call or write to a creditor and they refuse a fair offer, pay what you can afford anyway and try again. If you need advice or support, speak to National Debtline whenever you need to.
How debt affects your mental health and wellbeing
Our research shows that people in debt are twice as likely to say they have very poor mental health. Being in debt can make you feel alone. If you need advice or support, call National Debtline to speak to one of our expert advisers. In 2025, we gave advice to over 129,000 people.
To find out more about mental health, debt and extra support, read our Debt and mental health guide.
Where to get free debt advice
National Debtline has been giving free professional debt advice for over 30 years. Call 0808 808 4000 to get expert guidance to help you deal with your debts or get online advice.
