Money Wellness

How to get out of debt: six steps to deal with your debt

Struggling to keep up with debt repayments can feel overwhelming. But it is possible to escape problem debt.

In this guide, we look at six steps to tackle your debt problems.

woman exercising with piggy bank

1. Add up your debts

Anyone struggling with debt should start here. Although it can be tempting to bury your head in the sand when it comes to money problems, it’s much better to tackle the situation head-on. And the first thing you need to work out is exactly how much you owe.

Make a list of how much you have left to pay on each of your debts. Then add them all up. Now you know the size of the task at hand, you can make a start on getting back on track.

man on sofa

2. Prioritise your debts

Once you have a complete list of your debts, it’s time to categorise them. This means separating them into priority and non-priority debts.

Priority debts

Priority debts are the ones that can have the most serious consequences if you don’t pay them. They include things like:

  • rent
  • mortgage payments
  • overpaid benefits
  • loans that use your home as security
  • gas and electricity debts
  • council tax
  • court fines
  • hire purchase agreements for essential items (e.g. a car if there was no other way for you to get around, or an oven)
  • child support and maintenance payments
  • TV licence

The possible consequences of not paying priority debts include:

  • losing your home (repossession or eviction)
  • being visited by enforcement agents (bailiffs)
  • being forced onto energy prepayment meters
  • having your gas or electricity supply cut off
  • losing essential hire purchase belongings

Non-priority debts

Non-priority debts are things like:

  • credit card debts
  • hire purchase agreements that aren’t for essential items (e.g. a TV)
  • loans that don’t use your home as security
  • water bills
  • money borrowed from friends and family

The consequences of not paying non-priority debts are usually less serious. But creditors may still take action against you. Your debt could be passed to a debt collection agency and you could have a county court judgment made against you.

3. Create a budget

Now you’ve got a handle on what debts you’ve got, it’s time to look at what money you’ve got coming in and your other living expenses. It’s time to create a budget.

You can grab a pen and paper to work out your finances but you might find it easier to use our online budget planner.

Start off by gathering some documents together. Anything that shows the money you have coming in and what you’re spending it on will be useful. This might include:

  • bank statements
  • payslips
  • benefit letters
  • insurance documents
  • utility bills

Be honest

Don’t worry about how much you think you should be spending. For this exercise to be of any use, you need to be honest about where your money’s going. If anything, err on the side of overstating your spending.

Work out what you’re spending your cash on

If you pay for things with cash, it might be a good idea to keep a spending diary for a month. Make a note of what you’re spending your cash on and add it into your budget.

Don’t overlook small or occasional costs

Small payments are easy to overlook but the amount you spend on those morning coffees can soon add up. Be as thorough as possible.


It’s also easy to forget about expenses that only come up from time to time. This might include things like school uniform, or Christmas and birthday presents. With costs like these add up what you think you spend over the course of a year and split the amount across 12 months.

4. Review your spending

Now you know how much money you have coming in and where it’s going, you can look at your budget and see if there are any areas you could reduce your spending.

Could you get a cheaper mobile phone contract? Make sure you look for a new deal when your contract ends, otherwise you could end up paying a lot more than you need to. If you’re happy to keep your current phone at the end of your contract, you may be able to make big savings by opting for a sim-only deal.

It’s also worth shopping around for insurance to try and cut costs. See MoneyHelper’s guide on using price comparison sites to get the best deal on insurance.

With energy costs so high at the moment, making sure your house is well insulated is another way to save money. And it doesn’t have to cost the earth. Check out the Energy Saving Trust’s draught-proofing guide for ideas.

It’s also worth going through your budget and seeing if any costs are unnecessary. Cancel unused memberships and subscriptions.

woman on laptop surrounded by coins

5. Boost your income

As well as cutting costs, it’s a good idea to see if you can increase the amount of money you have coming in.

Approximately £19bn in benefits goes unclaimed each year. We completed a benefits assessment with more than one in three (38%) of the customers we spoke to in August 2023. On average, those customers found they could be claiming an extra £1,067. Try our benefits calculator to see if you’re entitled to extra support.

If you’re struggling to make ends meet, you may also be able to apply for a grant from a charitable organisation. Grants are available for things like:

  • bankruptcy and debt-relief-order fees
  • utility bills
  • household appliances
  • emergencies

Are others paying their fair share?

If you share bills, are others paying their fair share? Find out what to do if you’re struggling to get enough financial support from the other parent of a child who lives with you. Are you being paid correctly?

Look at your payslip to make sure you’re being paid the right amount. Check you’re getting at least the minimum wage.

Find out what to do if you’re not being paid at least the minimum wage or you think your employer is taking money they shouldn’t from your pay.

It’s also a good idea to check your tax code is correct. If it’s not, you might be paying the wrong amount of tax. You don’t want to pay more than you need to and paying too little could see you landed with a hefty bill down the line. If you need help with this, get in touch.

6. Get free debt advice

If, after following the steps above, you’re still unable to cover your living expenses and debt repayments each month, it’s time to get debt advice. We can help with this.

There’s always something we can do whether that’s offering advice on budgeting or helping you with a debt solution. You may be surprised at the range of help available.

Having said that, we understand it can be nerve racking plucking up the courage to confide in someone about money worries. We’ll do everything we can to make the process as painless as possible. Find out more about what our debt advice involves.

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Money worries? Get free debt advice today

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