How you repay your debts depends on:

• what spare income you have - this can be used to make regular payments to your creditors
• what assets you can sell - these can be sold to help pay your debts
• your situation - for example, if you’re bankrupt or facing bankruptcy there are alternatives like Fast-track Voluntary Arrangements and Debt Relief Orders

Where you can get help

The Money Advice Service has more information about debt management and where you can get free debt advice.

A Debt Management Plan is an agreement between you and your creditors to pay all of your debts. You make regular payments to a licensed debt management company. The company then shares this money out between your creditors.

The Money Advice Service has information on organisations that can advise you about whether a Debt Management Plan is right for you.

Get a Debt Management Plan

1. Only set up a plan with a debt management company authorised by the Financial Conduct Authority (FCA). Find an authorised company.

2. The company works out your monthly payments. You'll have to give details about your financial situation. For example, your assets, debts, income and creditors.

3. The company contacts your creditors and asks them to agree to the plan (they don't have to).

Costs

Some companies will charge:

• a set up fee
• a handling fee each time you make a payment

Make sure you understand the costs of your plan.

Eligibility

Debt Management Plans can only be used to pay 'unsecured' debts – for example, debts that haven't been guaranteed against your property.

Your responsibilities

Your plan can be cancelled if you don't keep up your repayments.

If you have a county court or High Court judgment against you, which you can't pay in full, an administration order is a way to deal with the debt.

The debt must be less than £5,000.

You make one payment a month to your local court. The court will divide this money between your creditors.

The Money Advice Service has information on organisations that can advise you about whether an administration order is right for you.

Get an administration order

To apply, fill in an application for an administration order (N92), and return it to your local court.

The court decides:

• how much of your debt you have to repay – for example, all or just part of it
• how much your monthly repayments will be
• how long the arrangement lasts

If you can't pay all your debts the arrangement is known as a 'composition order'.

Costs

There's a court fee each time you make a payment. This can't be more than 10% of your debt.

Example If you owe £5,000 the total fee can't be more than £500.

Eligibility

You must:

• owe less than £5,000, including any interest and charges
• owe money to at least 2 creditors
• prove you can afford your repayments - for example, give details of your income
• have a county court or High Court judgment against you, which you can't pay in full

Your responsibilities

You must keep up your repayments or the court can:

• take money from your wages – known as an 'attachment of earnings order'
• cancel the arrangement

Public records

Your administration order is added to the Register of Judgments, Orders and Fines.

It’s usually removed 6 years after the date the order was made.

If you repay your debts in full your entry is marked as ‘satisfied'.

You can also ask the court for a ‘certificate of satisfaction’. To do this, write to the court and send a cheque for £15 (made payable to Her Majesty's Courts and Tribunal Service).

An Individual Voluntary Arrangement is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an 'insolvency practitioner', who will divide this money between your creditors.

The Money Advice Service has information on organisations that can advise you about whether an Individual Voluntary Arrangement is right for you.

Get an IVA

1. You can only get an Individual Voluntary Arrangement through an insolvency practitioner - find an insolvency practitioner.

2. Your insolvency practitioner works out what you can afford to repay and how long the Individual Voluntary Arrangement lasts. You'll have to give details about your financial situation. For example, your assets, debts, income and creditors.

3. Your insolvency practitioner contacts your creditors. If those holding more than 75% of your debts agree to the Individual Voluntary Arrangement it will start. It will apply to all your creditors, including any who disagreed to it.

Costs

There are usually 2 fees:

• a set up fee
• a handling fee each time you make a payment

Make sure you understand the costs before asking an insolvency practitioner to act for you.

Your responsibilities

Your Individual Voluntary Arrangement can be cancelled if you don't keep up your repayments.

Public records

Your Individual Voluntary Arrangement will be added to the Individual Insolvency Register. It’s removed 3 months after the Individual Voluntary Arrangement ends.

Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £15,000, have little spare income and don’t own your home.

If you get one:

• your creditors can't recover their money without the court's permission
• you're usually freed ('discharged') from your debts after 12 months

Get a Debt Relief Order

You get a DRO from the Official Receiver (an officer of the bankruptcy court), but you must apply through an authorised debt adviser. They’ll help you fill in the paperwork.

The Money Advice Service has information about organisations that can help you find an authorised debt adviser.

Costs

The Official Receiver’s fee is £90. Your debt adviser can tell you how and when to pay it.

Eligibility

You’re generally eligible if all of the below apply - you:

• owe less than £15,000
• have less than £50 a month spare income
• have less than £300 worth of assets
• have lived or worked in England and Wales within the last 3 years
• haven't applied for a DRO within the last 6 years

Restrictions

If you get a DRO you must follow rules called 'restrictions'. You can't:

• borrow more than £500 without telling the lender about your DRO
• act as the director of a company
• create, manage or promote a company without the court's permission
• manage a business without telling those you do business with about your DRO

When do the restrictions end?

Check the Individual Insolvency Register to see when the restrictions end.

The restrictions usually last 12 months. They can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.

The Official Receiver will tell you if they should be extended. To extend them, you’ll be asked to agree to a Debt Relief Restrictions Undertaking. If you don't agree, the court can issue a Debt Relief Restrictions Order.

What you need to know

DROs can be cancelled if:

• your finances improve
• you don't co-operate with the Official Receiver - eg give them information they ask for

Your DRO is added to the Individual Insolvency Register - it’s removed 3 months after the DRO ends.

Your DRO will stay on your credit record for 6 years.

Fast-track Voluntary Arrangements (FTVAs) are a way to deal with your debts if you've already been made bankrupt. They’re an agreement where your assets are sold to pay your debts and your bankruptcy is annulled (cancelled).

Get an FTVA

You can only get an FTVA if you've already been made bankrupt by the court.

1. Contact the Official Receiver (an officer of the bankruptcy court).

2. They'll send you an FTVA application form and tell you what you need to do – for example, provide details of your assets.

3. Send your FTVA application to the Official Receiver.

4. If the Official Receiver accepts your FTVA application they'll ask your creditors to accept it.

5. The FTVA starts if 75% of the creditors who respond accept it. It will apply to all your creditors, including any who disagreed to it.

Cost

The Official Receiver's fees are:

• £315 to be paid before you send your application
• 15% of the total amount raised to pay your debts

What happens next?

When you get the FTVA:

• the court order making you bankrupt is annulled (cancelled)
• any assets not already sold or needed to pay your debts are returned to you
• your FTVA is added to the Individual Insolvency Register - it’s removed 3 months after the FTVA ends

Your responsibilities

You must co-operate with the Official Receiver, for example:

• send any financial information they ask for
• hand over the assets and make all the payments agreed in the FTVA