Government debt consolidation advice and programmes

While the UK Government does not offer debt consolidation loans, it does offer legislation and several official programmes to support those struggling with their finances. Government-backed debt solutions include bankruptcy, Debt Relief Orders (DROs), and Individual Voluntary Arrangements (IVAs), and free debt advice is available. If you come across a company offering government debt consolidation, you may want to avoid it.

7 min read
Tablet with the words get out of debt on screen

Does the government offer debt consolidation loans? 

No, the UK government does not offer debt consolidation loans. Instead, the government has issued legislation, and launched several programmes, aimed at supporting people who are struggling with their finances.  

Government-backed debt support includes free advice online through Money Helper as well as debt management solutions such as bankruptcy, Debt Relief Orders (DROs), and Individual Voluntary Arrangements (IVAs).    

Why do companies advertise government debt consolidation?  

Unfortunately, some companies have chosen to use phrases like ‘government debt consolidation’ within their advertising and on their websites even though they do not exist.  

There are several reasons why companies might use this phrase, especially if they are looking to add legitimacy and authority to their brand.  

If you do come across a company stating that they offer government debt consolidation or loans authorised by the government, it’s best to approach these claims with caution.  

Can the government help me get out of debt?  

The government does not offer debt consolidation loans, but there are other government-backed debt management solutions available that are aimed at helping people get out of debt. They also offer free debt advice online through Money Helper and can direct you to helpful charities and non-profit services like Citizens Advice and StepChange.  

If you are dealing with multiple debts, are unable to pay, and don’t qualify for a debt consolidation loan, the government’s insolvency solutions may be the best options for you. These solutions include:  

  • Bankruptcy 
  • Debt Relief Orders 
  • Individual Voluntary Arrangements 

There are fees associated with these solutions, but the government can provide free payment programmes and grants for those eligible.   


What is Breathing Space? 

Breathing Space is a free government programme that freezes any additional debt interest, fees, and charges over a period of 60 days and prevents your creditors from contacting you in this time.

You’ll still need to make debt repayments, but you can use this temporary respite to find a suitable debt management solution. You can only have Breathing Space once in any 12-month period. Find out more on the government website here

What are the formal debt solutions available in the UK?  

Debt Management Plans  

A debt management plan (DMP) is an informal agreement between you and your creditors that can help you make reduced payments towards your debts if you’re struggling to keep up. These agreements aren’t legally binding and typically don’t have a minimum term, so you can cancel at any time.  

You can arrange a DMP with your creditors yourself or hire a debt management company, who will manage your repayments on your behalf in return for a fee. In this scenario, you’ll make regular payments direct to the debt management company and they will then split those funds amongst your creditors.  

Terms and conditions apply. You’ll usually only be able to use a DMP to repay non-priority, unsecured debts like credit cards and personal loans

The informal nature of these agreements also means your creditors can still take further action to recover their money or ask you to pay the full debt. It’s also worth keeping in mind that your DMP could be cancelled if you fail to keep up with it and making lower repayments than the minimum amounts specified by the creditors could harm your credit score over time.  

Debt Relief Orders  

Debt Relief Orders allow you to suspend debt repayments for a fixed period (usually 12 months). When this period comes to an end, the debts within the DRO will normally be written off.  

To apply for a DRO, you will need to pay a fee of £90 and contact an authorised debt adviser who can make the application on your behalf.  

DRO eligibility requirements also apply:  

  • Your total debt must not exceed £30,000 
  • You must have less than £75 left over after paying your essential expenses each month 
  • You can’t have any assets worth more than £2,000
  • You can’t apply for a DRO if you’ve had one in the past six years 
  • You’ll be ineligible for a DRO if you’re currently involved in bankruptcy proceedings  

During the DRO period, restrictions will apply. The DRO can end if your situation changes or your income increases and it will not make you exempt from certain types of debt, including student loans, child maintenance payments, court fines, and any new loans.  

Individual Voluntary Arrangements  

Individual Voluntary Arrangements are a type of debt solution that can help you repay your debts through manageable monthly repayments. You might be eligible for an IVA if you have at least three different creditors and an income source that means you can pay some money towards your debt, even if you can’t afford it all.  

To apply for an IVA:  

  • Appoint an insolvency practitioner who will deal with your creditors on your behalf
  • They will work out how much you can afford to pay and how long the IVA should last (usually five to six years)
  • An IVA proposal will be submitted to your creditors
  • The creditors holding 75% of your total debt will have to agree to the proposal
  • Once your IVA ends, any outstanding unpaid debt will be written off  

While an IVA is like a consumer credit debt consolidation loan in that it can turn multiple debts into one manageable monthly repayment, it can affect your credit score for up to six years.  


Bankruptcy is an option for people who cannot afford to repay their debts. It is often seen as the final solution when all other debt consolidation and management options have been exhausted.  

Bankruptcy usually lasts for 12 months, and your creditors won’t be able to contact you or take any further action against you during that time. Depending on your circumstances and assets, when your bankruptcy period comes to an end, your outstanding debts may be written off.  

It costs £680 to apply for bankruptcy. If you can’t afford to pay this, you may be able to access payment plans, grants, and charity contributions.  

Even so, declaring bankruptcy is a serious financial decision. The process can involve a loss of your financial assets, the closure of your bank accounts, and restrictions on owning a business until your bankruptcy is discharged. Your bankrupt status will appear on your credit report, and you may find it difficult to get credit for up to six years. 

Can I get free debt consolidation?  

Free debt consolidation advice is available from several sources, including the government’s website Money Helper and non-profit debt consolidation charities like StepChange and Citizens Advice.  

Depending on your provider, you may also be able to secure a debt consolidation loan or balance transfer credit card with no additional charges. When comparing debt management options, consider taking time to check whether any arrangement or transfer fees apply, if there are any early repayment charges, and whether any fees or interest rate changes will be introduced during your loan term. You might see adverts for free debt consolidation loans, but interest will almost certainly still apply, and this can add up over time.  

If you’re struggling with debt, you can access free financial advice and support from a professional debt specialist. Visit Money Wellness, StepChange, Citizens Advice, National Debtline, or Money Helper to find out more.  

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