There are 8.3 million people in the UK who are currently in debt. The cost of living will always increase with time; general monthly expenses such as rent, groceries, phone bills, credit card payments and internet charges can eat into a large chunk of a person’s monthly income.

If you have acquired loans, most of your monthly income will go towards those payments until your debt is cleared. A loan with a high interest rate will be much longer to clear and can negatively impact your credit score if you default on repayments.

How Can I Clear Debt?

People looking to extricate themselves from a revolving debt trap can try the following suggestions to clear debt faster.

Prioritize your debts

Carefully read all loan documents and compare them, make a note of the amount you owe in total including the interest rate. Once you have the total amount, check to see which debt needs to be prioritized accordingly.

Categorize your debts according to priority and non-priority in order to clear debt faster. The priority debts will include the following.

  • Council tax
  • TV licence
  • Court fines
  • Child maintenance
  • Gas and electricity bills.
  • Income tax and Value Added Tax (VAT).
  • Mortgage or loans (secured against your home).
  • Hire purchase agreements for essential items.

Failure to pay these can lead to severe consequences such as a County Court Judgment (CCJ), imprisonment, and home repossession. The non-priority debts will include the following.

  • Payday loans
  • Store card debts
  • Credit card debts
  • Overdrafts
  • Bank loans (building society loans)
  • Water bills
  • Money borrowed from relatives and friends.

There are many debt charity organizations in the UK that help people in debt. They can assist you in keeping up with priority debts and strategically plan the best solution for you to clear debt.

For non-priority debts, it is advisable to pay off the most expensive ones first, this will be the debts with the highest interest rates. The first step is to downsize your existing debt and then manage the amount due through savings and budgeting.

Shift your debt payments

When trying to clear debt, shift your payments around to decrease the overall cost of your debt.

Credit Cards

Only attempt this If you have a decent credit score, if you move your credit card debt to a balance transfer credit card with 0% interest, you might be able to save money. However, closely inspect the terms and conditions of the card to avoid any hidden charges.

If you cannot avail a 0% credit card deal, look for the lowest interest rates card providers are offering. In case you do have a 0% deal, request your provider to increase your card limit on cards with low interest rates in order to move the expensive debt onto the low interest rate cards.

Store Cards

Store cards are similar to credit cards but can be used only in specific stores. However, certain store cards may have a higher interest rate than credit cards. Make sure to thoroughly read through the terms and check APR carefully.

Make money from other sources

Apart from getting a part time job, you can also clear debt by improving your savings habits.


If your debt was caused due to overspending, it is advisable to chalk out a budget. This will give you a better understanding of when not to spend and how to manage your expenses in order to clear debt.


In case you have availed loans, double check to see your payment protection insurance. Even if it is a small amount, it can be useful in clearing your debt. Also, check to see if you are in the correct council tax band as more than 4 million homes are overpaying taxes. Visit the government website to review your council tax band.

Sell your possessions

In order to clear debt faster, you can sell the things you no longer use. Every home will have a number of items that are just collecting dust such as old clothes, electronic goods, crockery, baby products and more.

These items can be sold online on e-commerce platforms like eBay or Facebook, there are even mobile apps available that can connect you with people interested in what you are selling.

If the debt is exponential, consider downsizing to a smaller house or selling your motor vehicle.

Switch service providers

If you are looking to clear debt faster, compare a list of all your utility providers (internet, telecom, energy and insurance) that you use. Check for the ones that are offering the cheapest deals and switch to them, you can end up saving more money.

There are comparison websites you can visit to check if you are currently overpaying. They can also show how much you can save per year as well as the current mortgage market rates, even if the difference is 1%, it can add to your benefit.

Make Sure to Inform your Lenders

Apart from the suggestions listed above, you can still clear debt if you choose the following.

Administration Order (AO)

If you are unable to pay and have a CCJ against you, consider applying for an AO. This order will act as a legal binding agreement between the creditor and you.

Debt Management Plan (DMP)

This is an informal agreement between the creditor and you. Both parties will work together to devise a payment plan.

Debt Relief Order

You can apply for a Debt Relief Order (DRO) if you do not have spare income, a house and have an existing debt of over £20,000. However, filing for a DRO will be recorded on your credit file.

People facing debt often avoid informing their lenders due to various reasons (embarrassment, fear, credit score impact). However, most lenders are willing to put people in debt on a payment plan according to what is feasible.

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