How to Choose the Best Debt Management Solution for You (in the UK)

This article is written in collaboration with Money Plus Advice.

Debt can feel like a heavy weight on your shoulders—it keeps you up at night, makes you dread checking the post (another bill?), and honestly, it’s exhausting. But here’s the good news: there are effective debt management solutions out there tailored for UK consumers just like you.

This guide will walk you through how to find the best debt solutions for your unique situation, the options available in the UK, and key tips to help you make informed decisions. By the end, you’ll feel more in control and ready to tackle debt with a solid plan.

Why Debt Management Is Key

Before jumping into solutions, it’s important to know why selecting the right debt management plan matters. Choosing wisely means more than just getting creditors off your back (though that’s a huge perk, too).

• Peace of Mind: The right solution brings relief, not more stress.
• Better Financial Health: It helps you repair and even rebuild your credit over time.
• Tailored Support: Not all debt is created equal, so your plan should work specifically for your financial needs.

If you’re based in the UK, your options vary slightly compared to other countries, so it’s worth exploring local Debt Management UK options.

5 Common Debt Management Options in the UK

Thankfully, there isn’t just one way to handle debt and MoneyPlus Debt Advice shares all the ways it can be managed. Here’s a breakdown of the most common UK debt solutions so you can identify what fits your situation best.

1. Debt Management Plan (DMP)

What it is

A Debt Management Plan is an informal agreement between you and your creditors where you pay back your debts at an affordable rate. It’s often arranged through debt charities like StepChange or companies specialising in debt help.

Best for

People with unsecured debts (like credit cards, personal loans, or overdrafts) who need to make their repayments more manageable.

Pros

• Flexible and tailored to your income.
• Creditors often freeze interest rates when you’re on a DMP.

Cons

• Your credit score might take a temporary hit.
• It doesn’t cover secured debts like mortgages.

2. Individual Voluntary Arrangement (IVA)

What it is

An IVA is a formal, legally binding agreement to pay back a portion of your debt over five to six years. After completing the plan, the rest of your debt is written off. An insolvency practitioner oversees the process.

Best for

Those with significant debts (£5,000 or more) and a steady income.

Pros

• Debts can be significantly reduced.
• Creditors legally can’t contact you or pursue further action once it’s in place.

Cons

• Your credit score will be impacted.
• It can affect your ability to rent or take out loans in the future.

3. Debt Relief Order (DRO)

What it is

A DRO is a form of debt write-off ideal for those with low incomes and minimal assets. Once approved, it halts all debt-related action for twelve months. If your financial situation doesn’t improve during that time, your debts are written off.

Best for

People with debts under £50,000 who don’t own property and have limited disposable income.

Pros

• Gives breathing room by stopping creditor action.
• It doesn’t cost anything to apply for one.

Cons

• Only available for specific income/asset thresholds.
• It will appear on the Individual Insolvency Register.

4. Bankruptcy

What it is

This is a formal process where your debts are essentially cleared, but it involves selling assets (like your home or car) to pay off creditors as much as possible.

Best for

People with overwhelming debt and few assets who cannot repay what they owe.

Pros

• Clears most debts in a year.
• Provides a fresh start.

Cons

• Significant impact on credit and lifestyle.
• Public record and stigma can be a barrier.
• Some debts are not included eg Student loan.

5. Debt Consolidation Loan

What it is

With debt consolidation, you merge all existing debt into one loan. This loan typically has a lower interest rate, making it easier to manage payments.

Best for

People with a decent credit score who want to simplify repayment.

Pros

• Easier to track one payment instead of juggling multiple bills.
• Can reduce overall interest paid.

Cons

• You need good credit to access low-interest loans.
• Risk of accumulating more debt if you don’t adjust spending habits.

Key Tips for Choosing the Right Debt Management Solution

Not sure where to start? Consider these practical tips to make an informed decision.

Assess Your Financial Situation

Are you dealing with unsecured debts, or are your obligations tied to assets like your home? Knowing exactly what you’re up against helps narrow down your options.

Get Professional Advice

Reputable charities like StepChange, National Debtline, or Citizens Advice Bureau offer free and impartial advice tailored to your financial situation.

Research Credible Providers

If you choose a managed service, make sure they’re authorised by the Financial Conduct Authority (FCA). Steer clear of organisations asking for huge upfront fees.

Be Honest with Yourself

Don’t select a solution that’s shiny on paper but impossible to stick to. Whether it’s committing to a 5-year IVA or making consistent DRO payments, the plan has to be realistic for your budget.

What Happens Next?

Now that we’ve tackled the basics, it’s time to take the first step. Debt can be overwhelming, but the right plan can turn panic into progress.

Start by assessing your finances and reaching out to trusted UK-based debt resources for guidance. Remember, no matter how tough things feel right now, you’re already moving in the right direction simply by seeking a solution.

Facing debt isn’t easy—but you’re not alone. Armed with the right tools and expert advice, you’ll find the best debt management solution for YOU.