Debt solutions

There is no single right answer. What suits you depends on how much you owe, who you owe it to, whether you own your home, and how much is left each month after the essentials.

This section explains the options available in England and Wales. If you live in Scotland, the rules and the options are different. See the Scotland section.

• Special payment arrangement

  An agreement with your council to pay off council tax arrears in affordable monthly amounts.

  Free and informal

• Breathing Space

  A legal pause of up to 60 days on enforcement, interest and charges while you get advice.

  A pause, not a solution

• Debt management plan

  One affordable monthly payment for council tax arrears, credit cards, loans and overdrafts together.

  Informal

• Debt Relief Order

  Writes off debts of up to £50,000 after 12 months, for people with very little spare money and no home.

  Free to apply

• Individual voluntary arrangement

  A formal deal with your creditors to pay what you can, usually for 5 years. The rest is written off.

  Formal insolvency

• Bankruptcy

  Writes off most debts after 12 months, but anything of value, including a share in a home, can be sold.

  Last resort

The options side by side

Which one might fit you?

Special payment arrangements

A special payment arrangement, or SPA, is an agreement with your council to clear council tax arrears in monthly amounts you can afford, on top of this year’s bill.

It costs nothing, it is not a formal insolvency, and it does not appear on your credit file. As long as you keep to it, the council does not take further action: no more court costs, no bailiffs, and no deductions you did not agree to. You can ask for one at any stage, but the earlier you do, the less it costs.

This is the service we provide. An adviser works out a realistic figure with you and puts it to your council for you.

Breathing Space

Breathing Space, officially the Debt Respite Scheme, is a legal pause for people in England and Wales who are struggling with debt. It does not reduce or write off anything. It gives you time to get advice and decide what to do.

• 60 days for a standard Breathing Space
• Once every 12 months
• +30 days after mental health crisis treatment ends
• Free started by a debt adviser or your council

While it lasts, the creditors whose debts are included must stop:

• Enforcement, including sending bailiffs or taking money from your wages
• Adding interest, fees and charges
• Contacting you to ask for payment

Council tax arrears are covered, once they are overdue. You still have to keep paying ongoing bills as they fall due, including this year’s council tax, rent or mortgage, and energy.

There are two types:

• A standard Breathing Space lasts up to 60 days. You can have one once in any 12 months.
• A mental health crisis Breathing Space is for people receiving mental health crisis treatment. It lasts for as long as the treatment, plus 30 days, and there is no limit on how often you can have one.

You cannot apply for Breathing Space yourself. It has to be started by a debt adviser authorised by the Financial Conduct Authority, or by your local council if it gives debt advice.

Debt management plans

A debt management plan, or DMP, is an informal agreement to repay your debts through one affordable monthly payment, run by a provider who deals with your creditors for you.

Many DMPs leave council tax out, because it is a priority debt. The plans we have access to can include council tax arrears, as long as your council agrees, alongside credit cards, loans and overdrafts. This year’s council tax is still paid to the council as normal.

Nothing is written off, and creditors do not have to agree or freeze interest, although many do. If council tax is your only debt, a special payment arrangement is simpler.

Debt Relief Orders

A Debt Relief Order writes off qualifying debts, including council tax arrears, after 12 months. It is for people who owe £50,000 or less, have £75 a month or less left over after essential costs, have savings and valuables worth £2,000 or less, and do not own a home.

It has been free to apply for since April 2024, and the limits were raised in June 2024. Many people who were turned away before then would qualify now. You apply through an approved debt adviser.

Individual voluntary arrangements

An individual voluntary arrangement, or IVA, is a formal agreement with your creditors, set up and run by an insolvency practitioner. You pay one monthly amount, usually for 5 years, and whatever is left of the included debts is written off at the end.

It suits people with several debts and a steady amount left each month, particularly homeowners. It is a long commitment, fees are taken from your payments, and councils often vote against IVAs where council tax is most of the debt.

Bankruptcy

Bankruptcy writes off most debts, including council tax arrears from before the order, usually after 12 months. It costs £680 and you apply online.

It is a last resort. Anything of value can be sold, including your share of a home, you may have to make payments from your income for up to 3 years, and some jobs are affected. For people with large debts and nothing to lose, it can still be the right answer.

Whichever option you choose

• Keep paying this year’s council tax. None of these options covers bills that fall due after they start.
• Check you are paying the right amount. Discounts, exemptions and Council Tax Reduction are often missed, and some can be backdated. See discounts and exemptions.
• Tell the council, and any bailiff firm, straight away once an arrangement, Breathing Space, or formal option is in place. Do not assume the message will be passed on.