How Can I Improve My Credit Score?

In today’s world, there are a few things that have changed, are changing even more, and we also need to stay more aware of. And one of those things is our credit scores.

We should all know our credit score and monitor it on a regular basis.

Why you may ask???

Credit files and credit scoring is used more today for other things then just determining your eligibility for a loan or credit card.

Credit score can be used to rate insurance policies, get hired for jobs, let a place to live, and even in our romantic lives.

Many a perspective partner or spouse has done a background and credit check prior to dating or beginning a romance with a potential spouse or partner.

Know Your Credit Score

You need a baseline to start with, and knowing your credit score at present, is that baseline. From there you can monitor your credit score, and improve it.

So what is a good credit score?

Different credit bureaus have different scoring guidelines, and different tiers of scores.

There are three major credit bureaus in the UK:

  • Experian
  • Equifax
  • Transunion, formally Call Credit

Each of these credit bureaus can score you from the low hundreds, which is a poor credit score, to some score as high as 999.

For some credit bureaus 700 is an excellent score, for some in the 900’s.

What Makes Up My Credit Score?

What Makes Up My Credit Score?

Credit scores are a numeric score assigned to your credit history based on five (5) factors. These scores are used in determining someone’s eligibility for credit, and the ability to repay a loan, and also in other aspects of our lives, such as insurance and in some instances a job.

The five (5) factors used to make a credit score are:

  • Payment History: This is how we pay our bills and debts and makes up 35% of our credit score.
  • Balances, How Much We Owe: The amount of debt we have makes up 30% of our credit score.
  • How Long You Have Had Credit: This makes up 15% of our credit score and is the length of time you have been in the credit bureaus, the length/timeline of your credit file.
  • The Types of Credit You Have: The types of loans you have, credit cards, car finance, mortgages, this makes up 10% of your credit score.
  • New Credit: When you apply for a loan or any form of credit, an inquiry is made on your credit file. This inquiry leaves a “footprint”. This factor makes up 10% of your credit score.
credit cards, over extended

What Factors Can Cause My Credit Score to Drop

In looking at how to improve your credit score, we need to look at what can reduce or hurt your credit score.

Remember a high credit score is ideal, the lower the number, not ideal.

This is important to know as those with high credit scores can receive better offers on lan and other forms of credit, and lower interest rates. A lower interest rate on a loan will save you money in the long-term.

In looking at the five (5) basic factors that make up your credit score, here are some reasons your credit score could be reduced:

  • Late Payments: How you pay your debts accounts for 35% of your credit score. A few late payments, or an account in arrears, will drastically lower your credit score.
  • How Much You Owe: If you are “maxed out” on your credit cards, or have large loans, and have used up the majority of your credit lines, this will damage your credit score. And as this factor makes up 30% of your credit score, having a lot of debt, and then being late with payments or in arrears, or in default, will reduce your credit score faster than a landslide.
  • What Forms of Credit You Have and Use: Loans such as a mortgage or even a credit card, are assigned a higher value then a payday loan, guarantor loan, or a doorstep loan.
  • Footprints/Inquiries/Applying for New Credit: As mentioned, each time you apply for new credit an inquiry or footprint is placed on your credit file, showing you have applied for credit. Too many of these in a short period of time, will reduce your credit score.

There are two types of footprints:

  • Soft: Soft inquiries or footprints do not affect your credit score. These can be pre-approve or pre-qualified offers you receive, or you reviewing your own credit file. If an employer wishes to see your credit file, they can but only with your permission, and this is a soft inquiry, and does not affect your credit score.
  • Hard: These inquiries are when you actively apply for credit, and do affect your credit score.

While different banks and lenders use different scoring models, these five factors are the large ones, however, some lenders can also look at the following:

  • Using a credit card for cash withdrawals
  • Moving house too often
  • Changing jobs too often
  • Who you have joint accounts with
  • Your social media accounts and posting and who you are friends with

So How Can You Increase or Improve Your Credit Score???

Pay Your Accounts/Bills on Time!

If payment history is 35% or the lion’s share of what makes up your credit score, then late payments and defaults will reduce it very quickly.

Limit Your Use of Credit this also ties in with Limit Footprints.

Do not be applying for loads of credit, just because you receive an offer in the post for a credit card does not mean you need to apply for it; even if it states pre-approved or pre-qualified.

These pre-qualifications may only be offered due to a preliminary or cursory check of your credit file, or a “soft inquiry”. When you actually apply then a “hard inquiry” is placed.

Again, too many of these hurts your credit score.

The Rental Exchange

The rent we pay is usually not reported to the credit bureaus, however, there is a programme that allows landlords to report rent payments to aid the tenant in creating or helping their credit score.

The Rental Exchange benefits both tenant and landlord. Tenants want to pay their rent on-time as it can improve their credit, which means landlords get their rent on-time.

Experian Boost

Experian Boost is a new ay to help improve your credit score, using bills and payments you make each month, that may not be reported to the credit bureaus.

You may have a Netflix account you pay each month, your Council Tax payment, (which is not reported to any credit bureaus), other bills, and also if you are regularly putting money into a savings account.

All these factors can be used to improve/increase your credit score.

Watch Credit Limits/Spread the Debt/Balances

If you will note from the five main factors that make up your credit score, balances or amounts owed makes up 30%, which is the second largest percentage or factor used.

Keeping your credit limits down, and looking at your debt to income ratio, and keeping it at 35% or less, in most instances, much less, will help your credit scrore.

You can also spread the balances out over multiple accounts to reduce your balances, and help your credit score.

If you have £3,000 on a credit card, with a £4,000 credit limit, you are getting high or close to your credit limit.

If you can spread that £3,000 over 2 or 3 accounts, your overall debt ration looks better as it is not all on one account, and close to its credit limit.

Two or three credit lines only using 20% of their credit limit, looks better than one account using 60% or more of its credit limit.

social media icons, mobile phone

Social Media

The Internet, and in particular Social Media, are a “whole new realm of mischief” these days.

And Social Media is in the tick of this mischief.

Using Facebook and other social accounts, people report the breakup of a relationship, where and when they are going on holiday, photos of them, their homes, selfie this and selfie that.

Who their friends are, and who they may be “feuding” with.

Some lenders, and even some employers, will use Social Media as a way to determine and learn more about someone, and that can be in making a decision as to grant credit or not.

Correct Errors and Omissions

We need to review our credit history on a regular basis, to see if there are any errors or omissions. Not all creditors report to all three (3) credit bureaus, but if we have a major loan or credit card and it is not reported, we can inquire with the lender and credit bureau as to why it is not reported.

If there is an error or mistake on your credit file, you can either us the credit bureaus system to report it and have it corrected, and also contact the creditor directly.


Your credit file and history must be an accurate report of how you have paid your accounts.

That can be good or bad, depending on how you pay the accounts.

Electoral Role

If you are not already on the Electoral Role, get on it!

Banks and lenders use this to verify you are who you say you are, and that you live at the address you state you are living.

What is Not Reported on My Credit Report?

There are some things not reported on your credit file, these things are:

  • Your Income
  • Savings Accounts
  • Rent History: Unless reported through the Rental Exchange
  • Some Small Loans: Such as doorstep lenders, loans between friends and family

Armed now with all this knowledge and detail, we all should be able to increase our credit scores, even if just a few points.

What Are IVA’s/Individual Voluntary Arrangements?

You’ve seen the ads on the Internet:

Get Out of Debt Today!

New Government Plan to Reduce Your Debt!

Pay Back Pennies on the Pound and Eliminate Your Debt?

Be Debt Free With Just a Few Simple Steps!

Most of these ads are referring to what is called an IVA or Individual Voluntary Arrangement.

Individual Voluntary Arrangements or IVA’s were born out of the Insolvency Act of 1986 and are a way for someone who is struggling with their debts, or may be insolvent and facing bankruptcy, to come to an agreement with their creditors to repay their debts.

What is an IVA?

In the simplest terms, IVA’s are a formal arrangement between you and your creditors where you make payments of what you show you can afford for a period of five years. At the end of the five years any remaining balances on the accounts is written off and you are debt free. Should you own any property with equity, you can be required to buy-out the IVA in the fifth year by releasing some of that equity.

IVA’s are for unsecured debts, you cannot include secured loans such as a mortgage in an IVA. You also cannot include student loans.

Now, let’s look at IVA’s in more detail.

Setting Up an IVA

IVA’s are set up and handled by Insolvency Practitioners or IP’s; they are the ones that actually put forth the IVA proposal to your creditors.

There also may be an intermediary that handles the paperwork involved, and helps to qualify you for an IVA. In many instances this may be a debt advisor.

Initially, an interview is done via the phone or in person to determine the level of debt you have and what your looking to do, besides sort out all the debts. What do you want to accomplish, your goals. Then a detailed income and expenditure form is completed, this will show what you may have as a surplus to fund an IVA.

Payments to an IVA are based on affordability, what you can afford each month after your allowed living expenditures. There is a minimum threshold of payments most creditors will accept, and as long as you can meet this minimum, an IVA can be put forth.

Once it has been established that you have the level of debt required to do an IVA, a detailed income and expenditure form is completed outlining all your income and expenses. This form shows your monthly expenses such as rent or mortgage, council taxes, food, petrol, electricity, gas, TV licence, insurances, cable, Internet, etc, all your monthly bills minus your debts. It also shows all your wages, tax credits, any benefits, you receive. Once the math is done, subtracting your bills from your wages, the amount that is left, the surplus income, is what is considered for payment into an IVA.

There is a minimum required payment to an IVA, this is based on the level of debt you may have and also what the final return may be to your creditors. In most instances creditors are looking for a 25% return as a minimum. This means that they hope to get 25% of the total balance owed to them back during the course of the IVA.

Once the monthly payments has been determined, proposals are put together and put forth to all your creditors to vote on. As long as the majority of your creditors agree to the proposal, the IVA is carried forward and it is binding to all your creditors.

The accounts are then frozen to any interest and new charges, and you begin making your monthly payments. You make these payments for a period of five (5) years, at which the end of the five years, any remaining balances on the accounts are written off, and you are debt free and starting out fresh.

Eligibility For An IVA

  • Resident of England, Wales or Northern Ireland
  • Two (2) or more creditors
  • Debts exceeding £5,500, in some instances exceeding £12,500
  • Surplus of income of at least £70 per month


There are fees involved in doing an IVA. However, these fees are a part of your payments each month into the IVA. You are not required to pay any amounts above and beyond the IVA payment. The fees are known and agreed to by your creditors.

Bankruptcy – IVA’s – Credit

Both bankruptcy and being enrolled in an IVA are forms of insolvency. In bankruptcy you are asking the courts to intercede on your behalf between you and your creditors. In an IVA you are having an Insolvency Practitioner do this for you.

If you are enrolled in an IVA you will be listed on the insolvency register, just a someone who is bankrupt would be. The listing will reflect that you are in an IVA.

insolvency register, list of those in debt, black list, black listed

Since being in an IVA is a form of insolvency it does affect your credit. Then again so does being in arrears, so the issue of an IVA affecting your credit is moot as your credit has already been damaged.

Everything stays on your credit history for six (6) years, then drops off. Once you complete the IVA, it will show on your credit history for another 12 months.

terrace homes, owning property if insolvent, losing my house in bankruptcy, going bankrupt with property

IVA’s and Property

If you own property and are insolvent, being in an IVA can help you preserve the property and not lose it. If you were to go bankrupt and own property with any equity, the property may be taken and sold. An IVA is a way to keep your property.

If you own property and enrol in an IVA you will be expected to release a portion of that equity in the fifth and final year of the IVA. This release of equity will be outlined in the IVA and is usually done by re-mortgaging the property.

How much equity are you expected to release? As much as possible that keeps within the guidelines for the re-mortgage and what you can afford. You would not be expected to put yourself in an unaffordable situation.

If the situation arises that you cannot re-mortgage to release any equity, for whatever reason, the IVA payments can be extended an additional six (6) to 12 months, after the fifth year. These payments are instead of the equity release.

Advantages and Disadvantages of an IVA


* You are debt free in five (5) years.

* It allows you to keep your property.

* Monthly payments based on what you can afford each month.

* Formally binding agreement.

* Avoid bankruptcy.


  • There is a minimum monthly payment your creditors will accept.
  • A majority creditor could reject the IVA, which causes the entire IVA to be rejected.
  • Not everyone can qualify to re-mortgage to release equity in the final year of the IVA.
  • The IVA is reviewed annually, any increases in income may be taken for the IVA.
  • Does affect your credit rating.
  • Failure to make payments could result in your being made bankrupt.

Failing An IVA

In most instances if three (3) consecutive payments are missed the IVA can be deemed as failed. Once the IVA fails any money paid into the IVA is essentially lost as it has been paid out to creditors and for fees.

Your creditors could then also petition for you to be made bankrupt, which may be why you entered into an IVA in the first place.

If you are struggling with IVA payments you do have some options:

  • Payment Holiday: You may be able to miss a few payments if approved by the IP.
  • Restructuring the IVA: If your situation has drastically changed, the IP may be able to restructure the IVA accordingly.
  • Additional Payments: Just as if you could not re-mortgage to release equity into the IVA, it may be possible to extend the IVA and you make additional payments after the five years.

Complition of an IVA

Once you have paid into the IVA for the five years, and if required did an equity release, the IVA is seen as paid. Any remaining balances on the accounts is written off and you are debt-free.

How Many People Complete Their IVA’s?

It is a high percentage of those that do complete the IVA. For the years 1990 – 2004 almost 70% of those that started an IVA completed it. In 2003 and 2004, that number dropped to 65% and 61%. From 2005 onward the statistics show lower, as many of those IVA’s are still ongoing and have not finished yet.

Differences Between an IVA and a Debt Management Plan

Another option is resolving any debts a person may have is a Debt Management Plan.

Debt Management plans or DMPs are an informal arrangement between you and your creditors allowing to make payments each month of what you can afford.

In certain situations a Debt Management Plan may be a favoured choice over an IVA, such as in the instance someone has a property with more equity then debt. An IVA would not be accepted as the creditors would simply state, sell the property and pay us in full.

The major difference between an IVA and a Debt Management Plan is that there is no concession on the balances, or amount owed is there is in an IVA. In a Debt Management Plan you continue making payments of what you can afford until the balance(s) are paid in full.

Debt Management Plans do offer more flexibility that IVA’s, in that if you cannot afford to make a payment one month, or the monthly payment will be less than agreed, you can do this. With this flexibility comes the unfortunate side-effect that your creditors may begin collection actions against you.

Both IVA’s and Debt Management Plans affect your credit.

DMP’s and IVA’s an Overview

Debt Management Plans:

  • Offers flexibility in the monthly payment, you pay what you can afford.
  • Works for people who have a large amount of equity in a property, more equity than their actual unsecured debt.
  • No minimum amount of debt is required.
  • Not a formally binding agreement, creditors do not have to accept the proposal, they will take the payments you make, but can still chase you for more.
  • Can be a good short-term option if you know your circumstances may change.
  • Can be a stepping stone to later do an IVA.
  • No reduction in the balances on the accounts, you pay unto the account is paid in full.
  • Creditors may not freeze the interest.
  • Offers flexibility in the monthly payment, you pay what you can afford.
  • Works for people who have a large amount of equity in a property, more equity than their actual unsecured debt.
  • No minimum amount of debt is required.
  • Not a formally binding agreement, creditors do not have to accept the proposal, they will take the payments you make, but can still chase you for more.
  • Can be a good short-term option if you know your circumstances may change.
  • Can be a stepping stone to later do an IVA.
  • No reduction in the balances on the accounts, you pay unto the account is paid in full.
  • Creditors may not freeze the interest.

Individual Voluntary Arrangements:

  • Formally binding agreement with your creditors.
  • The accounts are frozen so no new interest or charges are accruing.
  • Are a way to preserve property, as in bankruptcy you may lose the property.
  • Are a five (5) year term, at the end of the five years you are debt free.

* Need a minimum of £12,500 of debt.

  • Creditors reduce the balances on the accounts, you pay back a pence on the pound percentage.
  • Are a formal arrangement with your creditors, they agree to accept the payments you can afford and you are not chased for any additional payments

Individual Voluntary Arrangements have been, and still are, a vital way for people to get out of debt, avoid bankruptcy, and retain their property.

Having Debt in One Country and Travelling to Another

One of the things on everyone’s mind these days is, when can I travel again? When can I go on holiday, go away, get out of the country for a change?

When you think about it, we do like our holidays and travelling, and we have been locked-up, or locked down, technically for over a year! That is a long time to stare at four walls, work from home if you can, and only be able to go to “essential” stores and shops.

So as you can imagine there is a lot of pent-up demand to go abroad, get away and just not see the same places and faces.

As I write this, we are being told we may be able to venture out and dip our toes in the travel pool by mid-May; although this is subject to change due to many factors.

We can speculate as to how moving forward travelling will be.

The airlines and holiday resorts, and all involved in the travel industry have lost a lot of money in the past 12 months. To say they have lost millions of Pounds, would be an understatement. Some companies, agencies, and resorts have gone out of business, gone bust, never to return again. The numbers speak for themselves.

As a nation, and even as a World, we were used to just buying a ticket to go someone, board a train, plane, ship, or our own conveyance, and go there.

That all changed, and is still changing.

Will we need Covid Passports to travel?

Will be required to have had both jabs of the vaccine?

How do we show or prove we have had both jabs?

Will we be required to quarantine when we return?

How much more will we need to pay for vaccine passports, and any other related expenses?

These questions are outside of many questions we get about having debt and travelling.

Questions like:

Can I move to another country, and leave my debts behind?

Will I be stopped or arrested if I return to a country where I left debts behind?

Can I do a “runner” and leave my unpaid bills behind me?

Is leaving debt behind a crime?

Can I get a Visa in another country if I am in debt?

All good questions, and we will address them here.

Holidays and Travelling Abroad If You Are in Debt

Let’s start out with something basic and something we all probably already know.

If you want to go on holiday, you book your flights, the resort, transfers if needed, exchange your spending money, and off you go; well you did in the past. As mentioned some of this may and probably will change.

You then spent a fortnight in some warm, sunny and sandy climate, forgetting all your troubles back home.

One of those troubles may have been you had some bills that needed to be paid, or you were in arrears with some accounts.

You could still book your holiday, travel, and try to relax. No one was going to stop you at the airport for unpaid bills or accounts in arrears.

No one was going to stop you even if you were insolvent, and had filed for Bankruptcy.

There are no travel restrictions just because you have unpaid bills, accounts in arrears or are in debt.

Debt does not equal travel restrictions.

It also should be noted here, that being in debt is not a crime.

Debts can come from a crime, such as fraud, possible fines, court charges, and anything that is a crime, but owing money in itself is not a crime.

So yes, you can holiday and travel, even if you owe money.

Getting a Visa to Travel and Having Debt

visa request to enter a country, visa help, help with a vis to enter another country

For most countries we may wish to travel to and/or live, you can visit for a short period of time, but if you wish to stay there, live there and work there, you are going to be required to get the appropriate Visa.

For some countries, such as the USA, even to go there on holiday you need a special Visa, an ESTA or Electronic System for Travel Authorization.

The ESTA form asks you various questions such as your name, do you have any criminal convictions, it even may ask about your parents, and other family members, in addition to the purpose of your trip.

The ESTA form does not ask about finances, or if you have any unpaid debts. Finances for this particular Visa is not questioned.

In seeking a Visa to live in another country, it can depend on the type of Visa you are seeking as to if any personal finance questions are asked, and these questions are usually more of the “how will you support yourself” nature. They do not ask about unpaid debts, or who you may owe money to.

If you are seeking a Work Visa, this will show how you will support yourself, as your income will be disclosed.

In the example of a spouse Visa, here in the UK and in other countries, there is a minimum income your sponsoring spouse must earn to show they can support you.

Here in the UK that minimum income is £18,600, more if you have children.

When seeking a Visa to live and work in another country, a criminal background check, or police record check, what is called a DBS/Disclosure and Barring Service here in the UK, is carried out on applicants.

Once again, owing money or being in debt, does not show up on these checks, as being in debt or having unpaid accounts is not a crime.

There can be one caveat to this, what if you have CCJ’s/County Court Judgments or other judgments against you???

These judgments are a Civil matter, and not Criminal.

However, should you have a few judgments against you, it doesn’t look good, and could be considered as a testament to your character.

Which when applying for naturalisation or Citizenship here in the UK, there is a portion on the application about “Good Character”.

Being Bankrupt, having CCJ’s, and being in debt, could be seen as not being of good character. However, to my knowledge, experience, and research, being debt alone or having been bankrupt alone, is not an issue.

If you have debts and are sorting them out, in a repayment plan such as an IVA or Debt Management Plan, you seeking to resolve the issue, and this shows good character.

passport, small plane, electonic passport sign

Leaving Unpaid Bills and Debts Behind

We are a nation, even a planet of people who love to travel, and also move around. We began as nomadic tribes thousands of years ago, and not much in that sense has changed.

One day you are living in the UK, the next you may have a job offer and are off to live in Dubai.

I am going to give two examples here of leaving unpaid debts behind, and both these examples are based on true and factual situations I have seen, and advised on over the many years.

Example 1:

You are a UK resident/Citizen and move to Dubai for your dream job. Your new employer has secured your Visa to live and work there.

You live there in Dubai for a few years, and do as anyone does, you buy a car on finance, get a credit card, and maybe even a loan.

One day your employer states your services are no longer required, what do you do?

If you can find other work that will sponsor you to stay in Dubai, that is one option.

If you cannot find suitable work, you may decide to leave Dubai and move back to the UK.

But what about the car on finance, your credit card and loan?

Just by moving away does not relieve you of the liability of these debts.

You could move back to the UK, get a job, and still pay the accounts, but if for any reason you can no longer afford to repay the accounts when back in the UK, naturally the Dubai banks and your creditors, are going to chase you for payment.

The banks will make threats, harass you, and try to collect what is owed to them. However, the Dubai banks have no authority in the UK to collect an account…..unless….unless the account is sold or assigned to a collection agency here in the UK.

Then, that UK collection agency can collect the account, but they must do so in accord with the laws and rules here in the UK.

The UK collection agency has all UK collection tools at their disposal, such as getting a CCJ, or possibly making you bankrupt.

You as the debtor then also have all the UK’s debt management and insolvency options at your disposal to get out of debt.

You can try to arrange a Token Payment Plan, a Debt Management Plan, or possibly an IVA.

So if an account from another country outside the UK is assigned or sold to a UK collection agency, it can be collected here in the UK.

Example 2:

You are a UK Citizen/resident and decide to move abroad, somewhere warm and sunny, but you have £10,000 of debt here in the UK.

Can you just up and move, leave the debts behind?

Yes, you can, but….and this is a big but…you are still liable for the accounts.

This means, yes you can travel, move abroad, and live your life, but those you owe here in the UK may chase you to that warm and sunny place to try and collect what is owed to them.

As to what authority they have to collect the account(s), will depend on what country you have moved to.

Now to fast forward this scenario, lets say after a few years you tire of the beaches and sun, and decide to move back to the wet and windy climate here in the UK.

I want to move back to rainy London and leave my debts from another country behind.

Can you move back home?

Yes. You are a UK Citizen and as such you have the right to move back to the UK.

But what about the debts you left in the UK?

Depending on a few factors, you could still owe them, and moving back may start up the collection process again if your creditors are still looking for you.

One thing to keep in mind, if you have had no contact from a creditor for a period of six (6) years, a debt can be Statue Barred, which means it is no longer owed.

There is a caveat to this barring process, you must have had no contact with the creditor for six years, however, if a creditor has still tried to contact you, at either an old address, email account, or phone number, this may be seen as attempted contact.

To summarise, you can leave debts behind in the UK, move to another country, (as long as you meet that country’s requirements), and move back to the UK, having left unpaid debts behind.

Getting Stopped/Detained at The Airport For Leaving Debt Behind

Simply put, just for owing money, debts alone, you will not be stopped at a UK, or most other countries airports while travelling.

There are some countries where debt can be a crime, more on this later, but in those countries unless a Warrant has been issued, you can still travel.

With our travel restrictions slowly being lifted, and hopefully staying lifted, we may see more ex-pats abroad returning home, or us here seeking our fortunes elsewhere in other countries.

Whichever way we go, there will be those leaving debt behind them, or returning to debt still waiting for them.

How To Get Out Of Debt

Neither a borrower nor a lender be” Hamlet Act 1, Scene 3

Debt: “The state of owing money to someone, or something”.

Debt is a four letter word, and for some people, a dirty four letter word as they wish they were not in it (debt), or do their best to try and avoid it (debt).

Getting into debt can be easy, getting out of debt is not so easy.

Being in debt can also take time, and one usually does not find one’s self in debt overnight. It may take years. And just as it can take time to get into debt, it can take time to get out of debt. Both getting into debt, and getting out of debt, is a process.

How Can I Get Out of Debt?

This has to be the biggest question of the ages since man, and women, first started borrowing and finding themselves in debt.

Many people find themselves in debt obviously by borrowing too much and overextending themselves. This may be their fault as in knowingly continuing to borrow when they cannot pay it all back, or just using credit to get by as they are not earning enough to fully make ends meet.

Then there are those that find themselves in a difficult spot such as no longer being able to work through illness or being made redundant or losing one’s job.

But however you find yourself in debt, the next step is to get out of debt.

One concern many people have when looking at options, or solutions to get out of debt, is their credit and credit score. They are concern that what they may do to get out of debt will impact their credit in a negative manner.

This is a valid concern, however, for the moment this concern needs to be set aside.

If you are heavily in debt, then your credit score has already been affected, as being over-extended or using the majority of your credit limits, or in essence, “maxing out” a credit card or account, is 30% of what makes up your credit score.

So by being heavily in debt, your credit has already been affected in a negative way.

If you have missed any payments, or are in arrears and struggling with repayments, then your credit also has been affected negatively.

So the priority needs to be finding a solution to get out of debt. Any credit concerns will take care of themselves once the debt issue has been resolved.

It is easy to say “don’t get into debt” then you won’t need to find ways to get out of debt, however that can be easier said than done. So let’s put that piece of advice aside, and look at ways to get out of debt.

Stop Debting

UK debit card ready for use.

In focusing on paying off your debts, you need to stop incurring or creating any additional debt. You need to stop using any credit cards or lines of credit or overdraft(s) you may have.

Trying to pay off accounts that you are still using is like trying to shoot a moving target, much more difficult.

Pay More Each Month

A good option for getting out of debt, but it may be easier said than done.

Where do you get the extra money each month?

You may want to review your budget and track your spending for a few months to see if there are any areas you can cut back, or reduce your spending, to have extra money paid on the accounts.

By just making the minimum monthly payments on a credit card, it can take many, many years to pay the account off.

You may want to look at a second, part-time job, using all of what you earn to pay down the accounts.

The point here is you need to pay as much as you comfortably can towards the accounts each month to get them paid off.

Balance Transfers

Balance transfers can be helpful in getting out of debt, but you need to maximise the transfer.

An example may be you transfer a £3000 balance from a credit card with a 19% interest rate to a new credit card offering a six (6) month zero interest period. During that six months you need to pay as much as you can towards the balance as all the money you pay goes to the principal balance, none to interest.

This is where you need to possibly have resolved the first tip to getting out of debt, and have some extra money to pay towards the debt.

Once the introductory low rate has expired, you can inquire with the lender if they would extend the low rate for a few more months.

This also can work without doing a balance transfer as you can inquire with your current credit card company as to if they can offer a lower rate than what you currently have. You can ask if they can offer you six months at zero % or some rate lower than what you now have.

Consolidation Loans

Consolidation loans are loans that basically pay off a few smaller loans or credit cards.

An example may be you have two (2) credit cards totalling £2,000, an overdraft of £500, and an unsecured personal loan of £3,000.

You would look to take out a new loan for £5,500 to pay off the credit cards, overdraft and personal loan.

The consolidation loan would be for a lower interest rate than the credit cards, and the term could be extended, this is the number of payment you make, in order to reduce the monthly payment.

So instead of making four (4) monthly payments of possibly £400, you make one (1) monthly payment of £200. You have reduced your monthly outgoings by £200, and also making it easier to get out of debt.

The caveat here is you need to have resolved what brought you to the point of needing a consolidation loan. How did you find yourself in debt to begin with? If you have not resolved that issue, a consolidation loan may be like a taking a pain killer, it helps, but it is not the cure.

More Serious Ways to Get Out of Debt

If someone is in arrears with their accounts, it can be a very stressful time. They may no be thinking as clearly as they would if they were not under the stress. Collection agencies phoning, notices being posted regularly, it can all add up to a mountain of stress.

The following solution to getting out of debt are more serious in that they may involve the help and assistance of a third party, and someone professionally trained in insolvency and debt advice.

Which option is best for you will depend on your circumstance, what you are looking to ultimately do, and how much debt you have.

Do Nothing

Doing nothing, burying one’s head in the proverbial sand is an option, albeit not a good one, and not a good option for the long haul, as you will not get out of debt.

However, some people become paralysed by the fear, which is usually a fear of the unknown. The more they learn as to what they can do, the less they have to fear.

By doing nothing means you do not make payments, you just sit and wait. This does not mean your creditors will sit and wait. They very well may pursue all options available to them to collect what is owed.

This can exacerbate the situation by possibly having a County Court Judgment issued or worse yet Bailiffs. It is then that a more serious approach to handling the debts needs to be looked at.

helping hand to get out of debt, debt aids,

Token Payment Arrangement

This is where you make ‘token payments’ to your creditors each month of £1 or £5 to each account.

It is asked in this arrangement that the creditors freeze the account(s) to any interest and charges; it is asked, but not mandatory that the creditors do this.

The main issue with this option is that while your creditors have to accept the small payment, they can still pursue you for more; what you may find is that many creditors/banks will work with you to some extent taking these small payments, but at some point they may want more, and may begin other collection processes.

This arrangement is something you can do own your own or through the assistance of a third party.

Most creditors, especially in these times where so many people are on furlough, due to the Covid pandemic, or worse yet, made redundant, will work with you in accepting token payments. They usually will want to revisit, or review your circumstance every six (6) months.

Debt Management Plan

A DMP or Debt Management Plan, is similar to a token payment plan in that you make payments each month of what you can afford towards the debts, but these payments are a higher amount than just a few quid each month.

And again it is asked of the creditors to freeze the accounts to all interest and charges.

A detailed income and expenditure is completed, same as would be in a token arrangement, but after your living expenses you have an amount as surplus that is then distributed to your creditors on a pro-rate basis.

You will find again, that many creditors/banks will work with you in this type of plan, especially if it s documented well as to what you can afford and also if the forms are completed by a third party.

Most DMP companies that assist you can charge a small fee each month to administer these types of plans, however, these fees are to be transparent, and there are charity services who will assist you for free.

Again, while a DMP is a good option for people who have property that has equity and would lose this property in another form of insolvency, it is not the best option for the long-term as it can take many years to pay off the debts. But it does offer the most flexibility.

IVA/Individual Voluntary Arrangement

Individual Voluntary Arrangements are a formal arrangement between you and your creditors where you make payments of what you can afford each month, again documented by a detailed income and expenditure form, for five (5) years. At the end of the five years, the remaining balances on the accounts are written off. During this period the accounts are frozen to all charges and interest.

If you own property in an IVA, you are expected to release a portion of this equity, usually through re-mortgaging, in the 5th and final year of the IVA.

Since this is a formal arrangement, once it has been voted on and the majority of your creditors agree, it is binding to all the creditors involved.

IVA’s are set-up and handled by Insolvency Practitioners and there are fees involved to do an IVA. These fees are included as a part of the payback to your creditors and most IP’s setting up IVA’s do not charge any fees upfront to set-up an IVA.

Options For Getting Out of Debt That Involve the Courts

There are instances where someone in debt cannot follow through with a Debt Management Plan or an IVA, or they may not qualify.

Someone’s circumstances may have changed suddenly, like in the instance of being made redundant or loosing their job.

It also may be a person just wants the quickest way out of debt. They have struggled with the debts for years and are tired. They just want to become debt free.

That is when making use of the insolvency laws and having the courts intercede on your behalf can be the best option in getting out of debt.

There is a price to pay for some of these options, such as having someone appointed to look over and monitor your finances. However, these options will get you out of debt quickly.

Administration Orders

Administration Orders are for people who have debts of 5K or less, no assets such as property, and want the courts assistance in setting up a repayment plan. You fill out the forms, go to the courts, and you are allowed to pay what you can afford towards the debts and your creditors have to accept these payments.

Debt Relief Orders

Debt Relief Orders, or DRO’s are for people who have less than 20K of debt, no assets, and no more than £50 of surplus each month after their allowed living expenditures.

DRO’s are a form of insolvency similar to bankruptcy; I like to call them a mini-bankruptcy.

The gap that DROs fill is for people whose debts are less than 20K and also this form of insolvency is less expensive than bankruptcy and can be a bit quicker, not that you are discharged any sooner, but the process is streamlined.


Bankruptcy is a form of insolvency is for people who have any amount of debt, and are looking for the quickest route to be debt free.

You can be debt free within 12 months, similar to a DRO, but if you have assets or debts exceeding 20K, bankruptcy may be an option for you.

An Official Receiver is appointed in your bankruptcy to review your forms and interview you regarding your situation. If you have a surplus of income each month that exceeds £20, you can be required to pay a percentage of this surplus into the bankruptcy for a period of three (3) years.

Even though your bankruptcy can be discharged, or over within the 12 months, you would continue the monthly payments for another two (2) years.

If you own property and go bankrupt, this can be an issue, as if there is equity in the property, the Trustee may want this equity to be paid into the bankruptcy. They also will look at affordability to insure you can afford the property and any costs associated with it.

There are many options and solutions to getting out of debt. As to the best way for you to go to get out of debt will depend on many factors.

In some instances getting professional advice from someone trained in these matters is a must. You need to be advised as to how each of these options relates to your personal situation and what you are looking to accomplish.

My Friend Could Not Board Plane in the UK Because of Her Debt


Dear Jon,

I have a close friend in the UK who has been there for about 9 months to settle her father’s death settlement with the courts.

She is a US citizen and has finished up all necessary court proceedings and acquiring all necessary forms needed to take possession of the settlement. During her time there, she has generated a bit of debt in unpaid rent and utilities.

She says that they are not allowing her to leave until the debt is paid in full but does not have the means to do so until she returns home and has the inheritance collected.

I have tried different suggestions and finally told her to get on a plane and leave, then repay the debt after you are home.

She told me they put a do not board restriction on her until the debt is paid, so she cannot board a plane back to the US. It doesn’t sound right to me, but she said the UK government owns the rooms she was in, so they have the authority to do so.

Is there such law or right in the UK allowing what seems to me as imprisonment, not allowing a foreigner to board a plane out of the country due to unpaid bills?




I have not heard of anyone ever being detained or not allowed to board a plane just for owing money in the UK. I have never even heard of a “do not board” restriction, except in certain health issues, such as contagious diseases or all that is happening now, being required to show a negative Covid test within a certain time frame before flying.

Even owing money to the government here in the UK is no reason to be denied the right to leave the country.

What “rooms” is she staying at that owned by the UK government? The only government accommodations I know of are for asylum seekers and those being detained to be deported.

Owing money or being in debt is not a crime in the UK.

If you can provide us with some specifics:

How much does she owe, and to whom?

Has she been charged with any crimes?

What city is she living in?

Has she failed to meet any quarantine measures?

Has she contacted the US Embassy in London?

Has she overstayed here in any way? Was she on a Visitor Visa, or just here on holiday? Holiday stays are usually six (6) months.

Is her US Passport current? When does it expire?

If you wish to provide more details, you can post them in the comments, and I will research this more for you; if need be, make a few phone calls to see what more information I can find.