Getting out of debt isn’t easy. But it’s absolutely possible if you follow a proper plan.
According to the Bank of England, the average UK adult had personal debt of £33,410 (excluding student loans) at the end of January 2022.
If you’re in debt and feeling overwhelmed, this guide will show you exactly how to get out of it.
- Step 1: Face Your Debt (Write It All Down)
- Step 2: Separate Priority from Non-Priority Debts
- Step 3: Make a Budget (Work Out What You Can Pay)
- Step 4: Choose Your Debt Repayment Strategy
- Step 5: Increase What You Pay Each Month
- Step 6: Contact Your Creditors
- Step 7: Consider Debt Solutions (If You’re Really Struggling)
- Step 8: Stop Taking On More Debt
- Step 9: Build a Small Emergency Fund
- Common Mistakes to Avoid
- Getting Free Debt Help
- How Long Will It Take?
- Final Thoughts
Step 1: Face Your Debt (Write It All Down)
The first step is the hardest: Working out exactly how much you owe.
I know you don’t want to look. I avoided it for months. But you NEED to know the full picture.
Make a list:
For each debt, write down:
- Who you owe (bank, credit card company, catalogue, etc.)
- How much you owe
- Interest rate (APR)
- Minimum monthly payment
- Payment due date
Where to find this information:
- Credit card statements
- Loan agreements
- Bank statements
- Check your credit report (free from ClearScore, Experian, or Credit Karma)
Example:
| Creditor | Amount Owed | APR | Min Payment | Due Date |
|---|---|---|---|---|
| Barclaycard | £2,400 | 21.9% | £48 | 15th |
| Amex | £1,800 | 24.9% | £45 | 22nd |
| Argos Card | £650 | 34.9% | £25 | 5th |
| Total | £4,850 | £118 |
Seeing that total number is scary. But now you know what you’re dealing with.
Step 2: Separate Priority from Non-Priority Debts
Not all debts are equal. Some MUST be paid first or you’ll face serious consequences.
Priority debts (pay these first):
- Rent or mortgage arrears (you could lose your home)
- Council tax (they can send bailiffs or take money from wages)
- Energy bills (they can cut off your supply)
- Court fines (you could be arrested)
- Child maintenance (court action)
- TV licence arrears (criminal prosecution)
- Income tax/VAT (HMRC can take serious action)
Non-priority debts (pay after priorities):
- Credit cards
- Store cards
- Personal loans
- Overdrafts
- Payday loans
- Money owed to friends/family
If you’re struggling with priority debts, get free help immediately from Citizens Advice or StepChange.
Step 3: Make a Budget (Work Out What You Can Pay)
Now you need to know how much money you have each month to pay off debt.
Your income:
- Wages (after tax)
- Benefits
- Any other income
- Total: £____
Your essential expenses:
- Rent/mortgage
- Council tax
- Utilities (gas, electric, water)
- Food shopping
- Transport to work
- Phone (basic contract)
- Essential childcare
- Total: £____
Money left for debt: Income – Expenses = £____
If the number is negative, you’re spending more than you earn. You need free debt advice urgently.
If it’s positive, that’s what you have to tackle your debt.
Step 4: Choose Your Debt Repayment Strategy
There are two main approaches:
Avalanche Method (Fastest mathematically)
Pay minimums on everything, then put all extra money towards the debt with the highest interest rate.
Example:
You have £200/month for debt.
- Minimum payments total: £118
- Extra £82 goes to Argos Card (34.9% APR)
Once Argos is paid off, attack the next highest rate (Amex at 24.9%).
Pros: Saves most money on interest Cons: Takes discipline, you might not see quick wins
Snowball Method (Best for motivation)
Pay minimums on everything, then put all extra money towards the smallest debt.
Example:
Extra £82 goes to Argos (smallest at £650). Once cleared, attack next smallest debt.
Pros: Quick wins keep you motivated Cons: Costs more in interest overall
Which should you use?
Avalanche saves more money. Snowball feels better psychologically.
Pick whichever you’ll actually stick to. A less perfect plan you follow beats a perfect plan you give up on.
Step 5: Increase What You Pay Each Month
The faster you pay off debt, the less interest you pay.
Ways to find extra money:
Cut spending temporarily:
- No takeaways for 3-6 months
- Cancel subscriptions you don’t use
- Switch to cheaper supermarkets (Aldi/Lidl)
- No buying new clothes/shoes unless essential
- Pack lunches instead of meal deals
Earn extra money:
- Overtime at work
- Matched betting (I made £600+ in 3 months) [link to your matched betting post]
- Sell stuff you don’t need
- Online surveys (£50-80/month)
- Side hustles [link to your £500/month post]
Every extra £50/month you can find makes a huge difference.
Example:
£2,000 debt at 20% APR:
- Paying £50/month: Takes 61 months, costs £3,050 total
- Paying £100/month: Takes 24 months, costs £2,400 total
- Paying £150/month: Takes 15 months, costs £2,250 total
Step 6: Contact Your Creditors
If you’re struggling, contact your creditors BEFORE you miss payments.
Many will help by:
- Reducing your interest rate temporarily
- Freezing interest completely
- Accepting lower monthly payments
- Giving you a payment holiday
What to say:
“I’m experiencing financial difficulties and I’m worried I can’t afford my payments. I want to pay what I owe but I need help. Can you reduce my interest rate or accept lower payments temporarily?”
Most creditors would rather you pay something than nothing.
Get help from StepChange or National Debtline – they can negotiate for you.
Step 7: Consider Debt Solutions (If You’re Really Struggling)
If you genuinely can’t afford your debt payments, there are formal debt solutions:
Debt Management Plan (DMP)
What it is: Informal arrangement to pay reduced amounts to creditors
Who it’s for: People who can pay something but not the full amount
Pros:
- Flexible
- Can be cancelled anytime
- Avoid more serious solutions
Cons:
- Interest still charged (but often frozen by agreement)
- Takes longer to clear debt
- May affect credit score
Cost: Free if you use StepChange or PayPlan
Individual Voluntary Arrangement (IVA)
What it is: Formal agreement to pay what you can afford for 5-6 years, then remaining debt is written off
Who it’s for: People with £6,000+ unsecured debt who can’t pay in full
Pros:
- Debt written off after the term
- Legal protection from creditors
- Fixed affordable payments
Cons:
- Serious impact on credit score (6 years on file)
- Costs about £5,000 in fees
- If you don’t keep up payments, you could go bankrupt
Cost: Fees are taken from your payments
Debt Relief Order (DRO)
What it is: “Mini-bankruptcy” for people with under £30,000 debt and little income/assets
Who it’s for:
- Debt under £30,000
- Less than £75/month spare income
- Assets under £2,000
Pros:
- Debt written off after 12 months
- Only £90 fee
- Creditors can’t chase you
Cons:
- Serious credit impact (6 years on file)
- Restrictions for 12 months
- Must meet strict criteria
Bankruptcy
What it is: Legal process where your assets are sold to pay creditors, then remaining debt is written off
Who it’s for: Last resort when you can’t pay debts at all
Pros:
- Fresh start after 12 months
- Most debts written off
Cons:
- Extremely serious credit impact
- May lose your home
- Lose assets over £1,000
- Affects some jobs and professions
- Lasts on credit file for 6 years
Cost: £680 fee
Important: Only consider these with free professional advice from StepChange, Citizens Advice, or National Debtline.
Step 8: Stop Taking On More Debt
While you’re paying off debt, don’t take on new debt (except absolute emergencies).
Actions:
- Cut up credit cards (or freeze them in a block of ice!)
- Delete shopping apps
- Unsubscribe from marketing emails
- Avoid Buy Now Pay Later
- Don’t take out loans to pay off loans
It’s hard saying no to new things. But temporary sacrifice now means long-term freedom.
Step 9: Build a Small Emergency Fund
I know this seems impossible when you’re in debt. But even £50-100 in savings can stop you going into more debt when something breaks.
Try to save £10-20/month alongside your debt payments.
This tiny buffer stops you reaching for credit cards when the boiler breaks or the car needs a repair.
Common Mistakes to Avoid
Mistake 1: Only paying minimums
Minimum payments are designed to keep you in debt for decades. Always pay more if you can.
Mistake 2: Ignoring the problem
Burying your head in the sand makes it worse. Interest keeps adding. Creditors take action. Face it now.
Mistake 3: Not getting free help
Debt charities offer FREE advice. Don’t pay companies that promise to write off your debt for a fee. Get free help first.
Mistake 4: Using credit to pay credit
Taking a loan to pay credit cards rarely helps unless it’s a proper consolidation loan at lower interest.
Mistake 5: Giving up after a setback
You’ll have bad months. That’s normal. Don’t let one setback derail the whole plan.
Getting Free Debt Help
Free debt charities (DON’T PAY FOR DEBT ADVICE):
StepChange Debt Charity
- Website: www.stepchange.org
- Phone: 0800 138 1111
- Free, confidential advice
- Can negotiate with creditors for you
National Debtline
- Website: www.nationaldebtline.org
- Phone: 0808 808 4000
- Free advice and fact sheets
Citizens Advice
- Website: www.citizensadvice.org.uk
- Local offices nationwide
- Face-to-face advice
PayPlan
- Website: www.payplan.com
- Phone: 0800 280 2816
- Free debt management plans
How Long Will It Take?
It depends on:
- How much you owe
- Your interest rates
- How much you can pay each month
Example timelines:
£5,000 debt at 20% APR:
- Paying £100/month: 8.5 years, total cost £10,200
- Paying £200/month: 3 years, total cost £7,200
- Paying £300/month: 2 years, total cost £6,400
Use a debt calculator to work out your specific timeline.
Final Thoughts
Getting out of debt is hard. Really hard.
It requires sacrifice, discipline, and patience.
But it’s absolutely possible.
The key steps:
- Face your debt (write it all down)
- Prioritise correctly
- Make a budget
- Choose a repayment method
- Pay as much as you can
- Get free help if you need it
Start today. Even if it’s just writing down what you owe. That’s progress.
You’ve got this.
Get Free Help:
- StepChange – Free debt advice
- National Debtline – Free helpline
- Citizens Advice – Local advice
- MoneyHelper – Government-backed guidance
Last updated: October 2025