Seven tried and tested strategies to help reduce your debt.
7 Solutions on How to Get Out of Debt
Frequently Asked Questions
How to Get Out of Debt Quickly?
The pace of reducing debt will mainly depend on your financial situation. The quickest way would be to continue making minimum payments on all your debts and apply the debt strategy, the Snowball method. The idea is to tackle your highest-interest debt first so the overall cost of your debt reduces quicker.
Consider the snowball method if you want to reduce your credit accounts quickly. You tackle your debt from the smallest balance account and work your way up.
What’s the Average Debt per Household in the UK?
A recent study from January discovered that the average total debt per household was £65,435. This sum may sound like a large number, but this includes mortgages, which are naturally more expensive debts.
The study broke down some of these debts:
- The total unsecured debt per UK adult is £3,941.
- The average credit card debt per household is £2,277.
Debts will vary between households. Naturally, you may accrue more debt than a single-person household if you’ve got a big family.
How Can I Get Out of Debt with a Low Income?
If you’re worried you can’t make your debt payments on time, you may want to consider applying for a debt relief order (DRO) or an individual voluntary arrangement (IVA).
A DRO gives you breathing room as it allows you not to pay certain debts for a specified period. This time varies, but you’ll no longer have to pay the debts once the period ends.
An IVA is a legally binding agreement between you and your creditors to pay back your debts over an agreed period. The courts must approve the IVA, and you and the creditor must stick to it.
It’s important to mention that both options negatively impact your credit report, so only apply for these if it looks like your last option. Additionally, you can’t erase student debt with either of these options.
Can I Get Out of Debt with a Poor Credit History?
You can still qualify for a debt consolidation loan even with bad credit. A consolidation loan allows you to pay off all your debts in one go, so you have the loan to pay off.
Additionally, you can get a credit card to help consolidate debt and increase your credit rating. There are credit cards you can apply for that help you consolidate debt and build your credit score.
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