How To Manage Your Debts

Written By: Hannah O'Neill
Published: November 7, 2023

Debt is something many people in the UK deal with on a daily basis—but not all debt is bad. Student loans help people meet their career goals, while mortgages fulfil the elusive dream of homeownership. But what happens when your debts become an ongoing struggle?

Trying to manage numerous debts and juggling increasing interest rates can seem like an uphill battle, but there are ways you can avoid getting into more financial trouble and repay the money you owe. In this guide, we’ll reveal how to manage your debts successfully and improve your financial future.

The facts on debt

It’s common to feel alone when you’re experiencing financial problems due to debt. However, debt is one of the biggest struggles we face today, with the cost of living crisis leaving people with no option other than to borrow money. Think you’re all alone? Think again. These figures show just how serious the UK debt situation is:

Household debt:

  • In 2019, 36% of people in debt had a negative budget. That percentage increased to 51% in 2023 (The Guardian).
  • The UK’s household debt now equates to over £2 Trillion (PWC).
  • Household debt increased steadily between 2013 to 2023 (Statista).

Personal debt:

  • The average personal debt of adults in the UK is almost £35,000 (Moneyzine).
  • Four in ten people questioned for a survey stated they didn’t think they’d be able to save any money during 2023 (Office For National Statistics).
  • In November 2022, the UK’s credit card borrowing reached its highest level since 2004 (The Guardian).

Common debts:

  • The average debt for energy bills reached £1600 in 2023 (The BBC).
  • Almost 8 million people had to borrow money to cover their energy bills in the first half of 2023 (Citizens Advice Bureau).
  • Graduating students in 2023 will owe just under £45,000 in 2023, a £12,000 increase from 2016 (Statista).

The mental and physical impacts of debt:

  • 16% of individuals with debt problems experience suicidal thoughts (Mental Health UK).
  • People with debt are up to 20 times more likely to consider suicide (Health).
  • Studies show a clear link between credit card debt and poorer physical health (BMC Public Health).

Common ways of managing debts

Many people try to tackle debts independently – and sometimes it’s possible. Popular methods include prioritising debts and making lifestyle changes to pay them off. Let’s take a look at them in more detail.

  • Snowball Method: This method involves paying debts with the smallest balances off first and working your way through them. Some people prefer using the snowball technique as it offers small wins and can boost motivation.
  • Avalanche Method: The avalanche method is where you tackle debts with the highest interest rates first. It’s the most effective way to clear debts and reduce the interest you pay, but you notice the positive effects less.
  • Reduce Living Expenses: Another popular way to clear your priority debts is to reduce your monthly spending. For example, stopping unnecessary monthly subscriptions and not eating out can boost your monthly income.
  • Creating a Monthly Budget: Setting a monthly budget that covers all of your financial commitments can be helpful for debt management, as it helps you understand your spending behaviours and make a plan.

Can debt solutions help me regain control over my finances?

There are a lot of financial products out there that enable people to borrow money and pay off their outstanding debts. Of course, doing this means you still have debts—but these products can make handling them more manageable. At Believe Money, we specialise in helping people find loans that suit their needs and give them a more stable future. The following products could help you manage debt more effectively and avoid the ongoing impact of increasing interest rates.

Debt consolidation loans

As a popular debt solution, consolidation loans enable people to combine their outstanding loans into one monthly payment. Instead of juggling various expenses, you have one interest rate that usually remains the same throughout your loan. These loans offer flexibility and can boost your credit score if you stick to the repayments.


  • Consolidation loans let you balance multiple payments, making it easier to clear debt.
  • Instead of paying the minimum balance on your credit cards, you can free up money each month, as consolidation loans are often more cost-effective.
  • People with good credit scores can potentially secure lower interest rates from lenders.
  • Some creditors will allow you to add debts in the collection phase to the loan, which might help you avoid fines.


  • Debt consolidation loans that come in the form of home equity products can put your home at risk. Lenders use property as assets, and defaulting on the loan means you might lose the property.
  • Lenders use credit reports to determine your eligibility, so they might not offer low interest rates.
  • If you continue to spend on your credit card, you’ll have more debt to deal with.
  • Many lenders charge arrangement fees, which can add to your initial loan.

Explore Debt Consolidation Loans

Unsecured loans

Unsecured loans can be beneficial if you don’t own any valuable assets, as lenders will still consider your application. When you take out one of these loans, you can typically borrow between £ 1,000 to £25,000, depending on your financial circumstances and credit score. As providers have less security with an unsecured/personal loan, they may offer higher interest rates or a shorter duration to ensure they can recover their money.


  • Personal loans often have a shorter application process, as the company will perform a credit score check and don’t need to verify your home ownership status. In some cases, you could receive the money in just a few days.
  • You can use an unsecured loan to cover debts and repay the money over five years. Secured loans offer higher amounts, which also means they come with longer repayment terms.
  • Taking out an unsecured loan means you won’t have to worry about potentially losing your home.


  • Your eligibility for a personal loan depends on your credit history and whether you can manage the monthly repayments.
  • Personal loan agreements usually offer less money as your lender won’t have security. This can impact your ability to pay off large debts.
  • If you default on the monthly repayments, your lender can consult a collection agency and potentially take you to court.

Explore Unsecured Loans

Bad credit loans

Individuals with poor credit might struggle to find a loan provider, but a bad credit loan can be an ideal solution. These loans can come in numerous forms, including secured borrowing agreements and personal loans, but some people might opt for a guarantor loan. Secured loan providers usually accept people with bad credit, but that depends on the equity you own in your property. Personal loans often come with higher interest rates anyway – especially if you already have a low credit score.


  • Loans for bad credit can improve your score if you stick to the repayments.
  • You can use these loans for various purposes, including debt consolidation.
  • People with poor credit are more likely to be accepted.


  • Bad credit loans have higher interest rates, making it harder to manage the repayments.
  • Your repayments are set monthly, so you can’t alter how much you pay.
  • These loans can quickly mount up, and you could spend more on your credit cards, making the debt problem even worse.

Explore Bad Credit Loans


Debt consolidation remortgage deals are also available, but you must be a homeowner. You can choose two types of agreements: second-charge loans and complete remortgages. A second-charge loan lets you borrow a percentage of your current equity, freeing up some money to repay your debts. Some people also choose a complete remortgage and borrow a larger amount to cover their bills. These options are beneficial if high monthly payments are impacting your living costs.


  • Remortgaging can lower interest rates, depending on the deal you get.
  • You can use the extra money to reduce your debts and make one simple monthly payment.
  • Some people borrow more money to fund other purchases.


  • Applying for a new mortgage means you have to go through eligibility checks, and you might not pass them if you’re in a lot of debt.
  • Entering into a legally binding agreement and failing to make your repayments can result in the loss of your home.
  • Opting for a new lender means you’ll usually have to pay fees, which can add up.

Explore Remortgaging Deals

Would you like a free consultation with a debt adviser?

If you owe money, there are various solutions available and knowing those options can give you some much-needed breathing space. Believe Money is an impartial loan broker, specialising in supporting people from all backgrounds. Our advisors can help you find a loan agreement that suits your needs and gives you a better financial future. Debt can be a harrowing experience, but with the right support, you can rebuild your credit score and enjoy more flexibility. Please feel free to contact us today. We look forward to supporting you.


What if I don’t have enough money to get a loan?

If you can’t afford a loan, there are other solutions available. An Individual Voluntary Arrangement (IVA) allows you to relieve some of the burdens of debt by contributing a regular monthly amount to your creditors. They won’t be able to charge interest during this time—as long as you stick to the agreement. You’ll need to consult with an insolvency practitioner to secure an IVA. Debt Relief Orders are also an option as they enable you to have a break from repayments, and some of the debts will be written off if you can’t afford to pay them after 12 months. However, it’s essential to remember that these loans can impact your credit score, and most people won’t be able to access any credit agreements for their duration.

How can I simplify dealing with debts?

Making a list of all your debts can be helpful, as it separates non-priority debts from those requiring immediate repayment. Many creditors will also be understanding and willing to accept a lower monthly contribution, but it depends on the amount you owe. Most importantly, avoid spending on your credit cards or taking out payday loans, as they are new debts and have high interest rates.

How do I know which debt solutions are right for me?

By looking at your personal circumstances and monthly living costs, you’ll know what you can afford each month. If you don’t own a home, your options will be more limited, but personal loans can offer more flexibility. The best thing to do is speak to a debt advice service, as they can look at your financial situation and help you decide. We offer free advice, and there’s no obligation to choose a product.

About the Author

Hannah O'Neill

Hannah O'Neill

Hannah O'Neill is a leading financial expert with over 10 years of experience in credit and loans. She is helping people achieve their financial goals based in the United Kingdom. She has been featured in numerous media outlets. Her articles offer practical advice on how to improve your credit score, get the best possible loan rates, and manage your debt wisely.

We compare loans from our panel of the UK’s top lenders to get you the best deal.


Contact Us

Mon – Thursday 9am – 7:30pm

Friday 9am – 3pm

Call from a mobile or Landline:

01302 591 360