Are you worried about your debts and looking for help? Do you want to know if the government can help? This is the right place for you.
Each month, over 170,000 people come to our website to learn about debt solutions. We understand that you might be scared about not being able to pay your debt. We also know that you could be worried about false offers of help.
In this article, we’ll help you with:
- Understanding if the government can help you with your debt.
- Learning what is government debt help.
- Knowing what to do if you’re worried about your debt.
- Finding out about the government debt help scheme.
- Exploring other ways to deal with your debt.
Our team knows how it feels to be in debt, as we’ve also been there and have felt the same worry. That’s why we want to help you and give you the real facts about government debt help.
Let’s learn more about how you can deal with your debt.
Can the government help me get out of debt?
What is government debt help?
Government debt help is an umbrella term for a range of legally binding debt solutions introduced by the government many years ago, if not decades ago.
Some commercial debt help companies, such as debt management companies, often promote their services using terms like “government debt solutions”, “government debt help schemes”, or “official debt solutions.
This is very misleading.
Although debt management companies can help some debtors set up the introduced government debt solutions, the companies are not connected to the UK government.
The way they promote UK government debt relief can make debtors believe they’re dealing with a company appointed by the government, which isn’t the case!
They will usually charge you for advice or actions that can be done elsewhere for free – and that money is usually better off going toward paying off your debt.
This doesn’t necessarily mean you shouldn’t use a debt management company to access one of the solutions introduced by the government. But be aware of what you’re dealing with. You may prefer free debt advice and comparable debt solutions from a charity like StepChange Debt Charity, Citizens Advice or National Debtline.
Don’t worry, here’s what to do!
There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.
Fill out the 5 step form to find out more.
What is the government debt help scheme?
There isn’t a government debt help scheme. The government has introduced many schemes to help households with their finances, such as paying energy bills or getting on the property ladder, and support for financial stability.
But there are new initiatives and financial assistance programs to help you work out what to do about your debts without having additional fees and interest added to your debt. We will return to this later in this article.
You might be able to find some grants to pay off loans.
What are the options the government can provide?
Government-introduced debt solutions include:
- Debt Relief Orders (DRO)
- Individual Voluntary Arrangements (IVA)
- Protected Trust Deed
- Debt Arrangement Scheme (DAS), resulting in a debt payment programme
- Minimal Assets Process (MAP)
The first three debt solutions listed above can be used in England, Wales or Northern Ireland. The latter three on the list can only be used in Scotland.
Each has downsides, so it is important to research each one thoroughly. They will all impact your credit file, making it much harder to get any form of credit, including a mortgage or renting many properties, for six years after. Bankruptcy can also affect your employment if you work in some sectors. However, the advantages outweigh the disadvantages if you are in serious debt.
The best way to know which formal debt solution is right for you is to get debt advice from a charity like StepChange Debt Charity. The debt advice you receive from a charity will be confidential, personalised and free of charge, and they can help you with ongoing personal finance management.
What are Debt Relief Orders?
A Debt Relief Order is one of the formal debt solutions introduced by the government. It’s only available to debtors in England, Wales or Northern Ireland. When you qualify for a DRO, you stop creditors from contacting you for 12 months.
If your finances don’t improve during those 12 months, all your unsecured debts are written off.
How do you qualify for a Debt Relief Order?
An insolvency practitioner must set up Debt Relief Orders, and you can only use one if:
- You live in England or Wales with less than £30,000 of unsecured debt
- You live in Northern Ireland with less than £20,000 of unsecured debt
- You have a surplus income of only <£75 per month (<£50 in Northern Ireland)
- You have assets valued below £2,000 or £2,000 if you live in Northern Ireland
Again, debt advice services can tell you whether you meet DRO eligibility criteria.
Are there other debt solutions?
Yes, alternative debt relief options can be set up aside from the ones listed above. One of the most common is a Debt Management Plan.
Debt Management Plans work by agreeing lower monthly payments with creditors. You’ll then make a single payment divided between creditors each month. It’s common to ask for interest to be frozen while repaying with a Debt Management Plan.
Because Debt Management Plans are an informal agreement, you can negotiate a DMP or ask a debt charity to do it. Debt advice will tell you if it’s the best option for your financial situation.
Is there a government debt relief program?
Yes, there is now a government debt relief program called the Debt Respite Scheme or the Breathing Space Scheme for debtors in England or Wales.
In summary, this scheme prevents creditors from taking further action against you regarding arrears for 60 days so you can seek debt advice and identify the best debt solution for your situation.
Can I get debt written off (UK)?
Getting some or all of your UK debt written off is possible. There are different methods you can use to get debt written off. When a debt is written off, you’re no longer responsible for paying it.
Can the government write off my debt?
The UK Government introduced some of the methods of writing off your debt.
Although the government cannot intervene to write off your debt, it was responsible for creating the methods and legislation used to write off some or all of it.
How can unsecured debts be written off?
Debt can be written off in part or in full in different ways, including:
- Asking the creditor to write off your debt due to a severe financial hardship. Unfortunately, creditors are never obligated to write off the debt.
- Use a Debt Relief Order, which writes off all unsecured debts after 12 months if your situation hasn’t improved.
- Using an Individual Voluntary Arrangement can write off some of your unsecured debts at the end of the IVA.
- Declaring yourself bankrupt will give you a clean slate and write off some or all debts. The Scottish equivalent is sequestration.
Debts can become unenforceable after so many years depending on the type of debt and your location in the UK, per legislation. Many types of debt become too old to be collected after five years in Scotland and six years in England and Wales.
When debt becomes too old to be recovered, the creditor or company you owe cannot take legal action; therefore, you can never be made to pay. The debt isn’t exactly written off, but it’s as good as written off in many regards. This is called a statute-barred debt.
You can learn more about this subject by returning to my debt info page and selecting my Statute Barred guide.