Debt Flow chart

The flow diagram below is a quick way to navigate your debt options when it comes finances being impacted by things like credit cards and loans. Start where it says start and follow your answer.

Debt options flow chart

The Most Common Debt Options

Snowball Method – if you can afford to make the minimum payments on your debt, then this method to become debt-free is almost definitely your best option. The great thing about the snowball method is that it actually improves your credit score, whereas the other options will damage it.

Debt Management Plan (DMP) – this solution has you paying less than the minimum every month and the lenders stop charging interest. Ideal for a short period if you have, for example, lost your job.

Individual Voluntary Arrangement (IVA) – this solution works well if you owe over £6,000 and need to protect your house from being repossessed.

Debt Relief Order – is suitable if you have debts of less thank £20,000, have barely any income and don’t have a house.

Bankruptcy – is for many people the fastest way to way to hit the reset button. Don’t be put off, there’s a lot of stigma around the word ‘bankruptcy’, however it could be the right thing for you to do.

Once you’ve found out the recommended debt solution, read more in-depth and compare to other options on the debt options page.

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