How to become debt-free in six steps

Owing money can feel stressful — whether it's a little or a lot. But if you're worried about debt, you're far from alone. An estimated 7 million UK adults are currently behind on at least one household bill.

The good news is that by taking it one step at a time, you can work towards becoming debt-free in a way that's manageable. Here's how to get started.

Step 1: Find out exactly what you owe

You can't clear your debts without knowing how much you owe and who you owe it to. It might feel scary to look, but getting this information is the most important first step.

Start by getting a free copy of your credit report. This shows your payment history and most of the debts in your name. There are three main credit reference agencies in the UK, and each one may hold slightly different information about you, so it’s worth checking all three:

• Equifax
• Experian
• TransUnion

While you’re looking, make sure you check for any errors on your report and get them fixed. Keep in mind that some debts won't show up on your credit report, including:

• Council Tax arrears
• Court fines
• Benefit overpayments
• Student loans
• Some utility debts
• Private debts to family/friends
• Debts owed to small traders or solicitors

Also remember that lenders can take four to six weeks to provide credit reference agencies with any updates. So, check any letters or statements from your credit providers too, just to make sure you have the most up-to-date picture.

Step 2: Sort your debts into priority order

Not all debts are equal. Missing payments on some can seriously affect your home, your finances, and your credit report — so knowing which to tackle first really matters. Sorting your debts into two groups is a good place to start.

Type	What it means	Examples
Priority debts	These need to be kept up to date above all else. Falling behind can put your home at risk, lead to court action, and cause lasting damage to your credit report.	Mortgage Rent Secured loans Council Tax Gas and electricity bills County court judgments (CCJs) Child maintenance
Non-priority debts	Still important, but less urgent.	Credit cards Unsecured loans Overdrafts Money owed to friends or family

Step 3: Create a budget

Once you know what you owe, you need to work out how much you can put towards paying it off each month.

Look at your income and outgoings, then ask yourself:

• Can I spend less on anything? For example, changing food shop habits, or reduce your spending on socialising until your debts are cleared.
• Can I get a better deal on my bills? Switching energy supplier or mobile provider could save you money.
• Could I consolidate debt? Combining existing debts into one consolidation loan or balance transfer credit card could reduce your monthly payments, but always read the small print. In some cases, paying less each month might mean you pay more in interest overall, and the debt may take longer to clear.
• Can I cut anything out completely? For example, subscriptions you barely use.

Every pound you free up can go towards paying off your debt faster.

Step 4: Pick a repayment strategy

Make sure you're always paying at least the minimum payment on every debt. If you have any money left over after that, you can use it to pay off one debt faster at a time.

Two popular repayment options to consider are the snowball and avalanche methods. Both work — it just depends on what keeps you going.

Method	How it works	Best for
Snowball	Pay off your smallest debt first, then work up to the biggest.	People who need quick wins to stay motivated.
Avalanche	Pay off the debt with the highest interest rate first.	People who want to pay less interest overall.

Step 5: Find ways to bring in extra money

As well as cutting back on spending, bringing in a bit of extra cash can help you pay off debt faster. Here are a few ideas:

• Sell things you no longer need - Vinted is great for clothes, while Facebook Marketplace works well for furniture, toys, and tech.
• Check what benefits you're entitled to - You might be eligible for support you're not currently claiming. Bear in mind that eligibility for some benefits depends on how much money you have coming in (means-tested), so extra income from a side hustle could affect what you receive.

Step 6: Ask for help if you need it

Becoming debt-free isn't always straightforward. If you're struggling, don't suffer in silence — help is available.

You can contact the people you owe money to directly. Many providers are willing to:

• Freeze any interest charged on your account
• Agree to lower monthly repayments
• Pause payments while you get debt advice
• Offer alternative ways to settle what you owe

You can use a Citizens Advice letter template to write to your creditors and explain your situation.

If you're struggling, these formal debt solutions may also be available:

• Individual Voluntary Arrangement (IVA) — A formal agreement between you and your lenders to repay what you can reasonably afford, usually over five years.

• Debt Relief Order (DRO) — If you owe less than £50,000 and have little spare income or assets, a DRO may allow your debts to be written off after 12 months.
• Bankruptcy — A legal process that can clear debts you're unable to repay, though it's worth understanding the longer-term impact before going down this route.
• Debt Management Plan (DMP) — An informal arrangement where you agree with your lenders to repay what you owe at a pace that works better for you.

Each of these options works differently and can have a lasting impact on your credit file, so it's worth getting free, independent advice before deciding which is right for you. You can get free debt advice from:

• Citizens Advice
• MoneyHelper
• National Debtline
• StepChange

If you need some breathing room, the government's Breathing Space scheme could help. It pauses interest, contact from creditors, and any enforcement action for 60 days — giving you time to get advice and work out your next steps. You can apply through any of the free organisations listed above.