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What To Do If You Can’t Afford Your Payday Loan

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, Uncategorized.

Updated for 2026

A payday loan is a short-term borrowing option, usually for a small amount, designed to tide you over until your next payday. Because payday lenders often accept applicants with poor credit histories, the interest rates tend to be significantly higher than other forms of borrowing. If you can’t afford your payday loan repayments, the debt can quickly spiral due to these high interest charges.

Before approving your application, the lender should carry out affordability checks, looking at your income and outgoings. However, they are not in a position to advise you on whether a payday loan is the right option for your circumstances. That is where independent debt advice comes in.

Steps to Take If You Can’t Afford Your Payday Loan

If you have already borrowed from a payday lender and are struggling to keep up with repayments, here are some practical steps to consider:

Contact your lender as soon as possible. Explain your situation honestly. Under FCA regulations, your lender is required to treat you fairly and point you towards free, independent debt advice. They may agree to freeze interest temporarily or accept reduced payments while you get back on your feet.

Consider cancelling your continuous payment authority (CPA). If you are certain you cannot make a payment, you have the right to cancel your CPA or direct debit. Speak to your lender first to understand any implications, then contact your bank to revoke the authority. Since 2014, the FCA has limited lenders to two failed CPA attempts, giving you more control over your account.

Keep a written record of everything. Save emails, note down phone conversations, and keep copies of any letters. A clear paper trail protects you if there is ever a dispute about what was agreed.

Do not roll over your loan. If your lender offers to extend or roll over your payday loan to the following month, think carefully before accepting. Rolling over adds extra fees and interest, making the total amount you owe even larger. The FCA has capped the total cost of a payday loan at 100% of the original amount borrowed, but rolling over still increases your debt unnecessarily.

Falling behind on a payday loan can also affect your credit score, so it is worth acting quickly to limit the damage.

Debt Solutions for Payday Loan Debt

If your financial difficulties are more than a short-term problem, there are formal and informal debt solutions available in England, Wales and Northern Ireland. Each one works differently, so it is important to understand how they could apply to your situation. The information below is for general guidance only and should not be treated as financial advice.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement between you and your creditors, arranged through a licensed Insolvency Practitioner (IP). It allows you to repay a proportion of your debts over a set period, typically five to six years, based on what you can realistically afford.

Your IP will review your income and essential outgoings to work out a monthly payment that leaves you enough for rent or mortgage, household bills, food and other necessities. If your creditors accept the proposal, you make one affordable monthly payment for the duration of the arrangement. At the end, any remaining qualifying debt is written off.

Payday loans are classed as unsecured debt, so they can generally be included in an IVA alongside other debts such as credit cards, store cards and personal loans.

Debt Relief Order (DRO)

A Debt Relief Order may be suitable if you have relatively low debts and limited assets. A DRO lasts for twelve months, during which your creditors cannot chase you for payment or take legal action against you. If your financial situation has not improved by the end of that period, the debts covered by the order are written off entirely.

To qualify for a DRO in 2026, you must meet several conditions. Your total qualifying debts must not exceed £50,000. Your surplus monthly income, after essential spending, must be no more than £75. You must not own a vehicle worth more than £2,000 or have savings and assets above £2,000. You also need to have lived or carried on business in England, Wales or Northern Ireland. The application fee is £90, paid upfront.

Debt Management Plan (DMP)

A Debt Management Plan is an informal arrangement where a third-party provider negotiates with your creditors on your behalf. You make a single monthly payment to the DMP provider, who then distributes it among your creditors.

Because a DMP is informal rather than legally binding, it offers flexibility: you can adjust payments if your circumstances change. However, your creditors are not obliged to stick with the arrangement and could still take further action if they choose to. A DMP is particularly suited to non-priority debts like credit cards, store cards and unsecured loans, including payday loans.

If you are worried about how debt is affecting your wellbeing, you are not alone. Many people find that financial pressure takes a toll on their mental health, and seeking support early can make a real difference.

Bankruptcy

If other options are not suitable, bankruptcy provides a way to clear your debts and make a fresh start. You can apply online through the Insolvency Service, and the application fee is £680.

Once you are declared bankrupt, creditors can no longer pursue you for the debts included. However, any non-essential assets you own may be sold to repay what you owe. Bankruptcy typically lasts twelve months, after which you are discharged from most of your debts. It will remain on your credit file for six years from the date of the order.

Bankruptcy carries certain restrictions during the twelve-month period, and it becomes a matter of public record. For these reasons, it is generally considered a last resort after exploring the alternatives. You can read more in our guide to things to know before declaring bankruptcy.

Get Free Payday Loan Debt Help

If you can’t afford your payday loan and want to explore your options, get in touch for a free, no-obligation assessment. We can help you understand which debt solution might be right for your circumstances.

The information on this page is for general guidance only and does not constitute financial advice. Everyone’s situation is different, so we recommend speaking to a qualified professional before making any decisions about your finances.

Ready to Find Out if You Qualify for Help?

Use our Solution Finder for a free, no-obligation assessment. Our team can help you understand your options and take the first step towards a debt-free future.

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How to Deal With Rising Utility Bills

Written by Alex Swindells on . Posted in Debt help.

Updated for 2026

Millions of UK households are feeling the squeeze from rising utility bills. Energy costs, water charges, and council tax have all climbed in recent years, and 2026 is no different. If you are struggling to keep up with payments, or worried about falling behind, you are not alone.

This guide covers practical steps you can take right now to reduce your bills, plus a breakdown of the formal debt solutions available if your utility debts have become unmanageable.

Why Are Utility Bills Still Rising in 2026?

The energy price cap set by Ofgem continues to shift each quarter. While wholesale gas prices have settled compared to the spikes of 2022 and 2023, suppliers have been passing on infrastructure and green levy costs to customers. Water bills have also risen following price reviews by Ofwat, and council tax increases have been confirmed across most local authorities.

For households already managing tight budgets, these incremental rises add up. According to MoneyHelper, energy and household bills typically account for around 25% of a household’s monthly spending. When those costs climb, the knock-on effect touches everything from food shopping to debt repayments.

Practical Steps to Reduce Your Utility Bills

Before looking at formal debt solutions, there are several things you can do to bring your costs down or manage payments more effectively.

Switch or renegotiate your tariff

Even with the price cap in place, you may be on a more expensive variable tariff when a fixed deal could save you money. Contact your energy supplier directly, or use a comparison service to check whether a better rate is available. If you are out of contract, you have nothing to lose by asking.

Apply for the Warm Home Discount

The Warm Home Discount scheme provides a £150 discount on your electricity bill each winter. You may qualify automatically if you receive certain benefits, including Pension Credit or Universal Credit with a low income. Check your eligibility on gov.uk or contact your supplier.

Set up a payment plan with your supplier

If you have already fallen behind on payments, the worst thing you can do is ignore it. Energy suppliers are required to work with you to find a manageable repayment arrangement. This could mean spreading your arrears over several months on top of your regular usage. Your supplier must consider what you can realistically afford.

Request a prepayment meter

A prepayment meter lets you pay for energy as you go, which can help with budgeting. Be aware that emergency credit on prepayment meters is a loan, not free energy, so keep an eye on your balance. Since 2024, Ofgem rules mean that prepayment customers should not be charged more than direct debit customers under the price cap.

Check your water bill

If you live alone or in a small household, a water meter could reduce your bill. Most water companies will install one for free. You can also apply for social tariffs or reduced rates if you are on a low income: contact your water provider to find out what support is available in your area.

What If Your Utility Debts Are Unmanageable?

When practical cost-cutting is not enough and debts are stacking up, it may be time to consider a formal debt solution. Here are the main options available in England and Wales.

Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement where a third-party company negotiates with your creditors on your behalf. You make one affordable monthly payment, and the DMP provider distributes it across your debts. A DMP typically lasts between five and ten years, depending on how much you owe and what you can afford. It is flexible: you can adjust payments if your circumstances change.

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement is a legally binding agreement set up through a licensed Insolvency Practitioner. Your IP assesses your income and essential spending, then proposes a monthly payment to your creditors over a fixed period, usually five or six years. At the end of the IVA, any remaining unsecured debt included in the arrangement is written off. You need a minimum debt of £5,000 to qualify.

An IVA also gives you legal protection from creditor action, meaning they cannot chase you for payments or add further interest once the arrangement is in place.

Debt Relief Order (DRO)

A Debt Relief Order is designed for people with low income, few assets, and debts up to £50,000. The DRO fee is now free, making this option accessible to those who need it most. During the 12-month moratorium period, your debts and any interest are frozen. If your situation has not improved by the end of that period, the debts are written off entirely.

To qualify, your surplus income must not exceed £75 per month and your total assets must be worth less than £2,000.

Debt Consolidation Loan

A debt consolidation loan combines multiple debts into a single monthly payment, often at a lower interest rate. This works best if you have a reasonable credit score and can secure favourable terms. It simplifies your finances but does not reduce the total amount owed, so make sure the overall cost (including interest) is genuinely lower before committing.

Bankruptcy

If your debts are severe and other solutions are not suitable, bankruptcy may be an option. The application fee is £680, and once declared bankrupt, most of your unsecured debts are written off after 12 months. Bankruptcy does come with restrictions, including potential loss of assets and a significant impact on your credit file, so it should be considered carefully. Gov.uk has full details on the bankruptcy process.

Where to Get Free Debt Advice

Whatever your situation, free and impartial debt advice is available. StepChange offers a comprehensive online debt advice tool and phone support. MoneyHelper provides guides, calculators, and a debt advice locator. Citizens Advice can also help you understand your rights with utility suppliers and creditors.

If you would prefer to speak to a debt solutions company directly, Swift Debt Help can assess your situation and recommend the right option for your circumstances.

Get Help With Your Utility Bill Debt Today

Rising utility bills do not have to spiral into a debt crisis. Whether you need help negotiating with your supplier, setting up a payment plan, or exploring a formal debt solution like an IVA or DRO, support is available.

Contact Swift Debt Help for a free, no-obligation assessment. We will look at your income, spending, and debts to recommend the best path forward for you.

Swift Debt Help does not provide financial advice. The information on this page is for general guidance only and should not be treated as a recommendation. Always seek independent advice tailored to your personal circumstances.

How Can Spiralling Debt Affect Your Mental Health?

Written by Alex Swindells on . Posted in Debt help.

Updated for 2026

Debt and mental health are closely linked, and if you are struggling with money worries right now, you should know that you are far from alone. Research from the Money and Mental Health Policy Institute shows that people in problem debt are three times more likely to have thought about suicide in the past year. That is not a statistic to skim past. It is a serious reality for millions of people across the UK.

The cost of living squeeze that began in 2022 has not gone away. Energy bills, rent, groceries and council tax have all risen sharply, and many households are now using credit just to cover essentials. According to StepChange, over 6 million people in the UK are behind on at least one household bill. When you are in that position, it is easy to feel trapped, anxious and completely overwhelmed.

How Does Debt Affect Your Mental Health?

Living with unmanageable debt puts your body and mind under constant strain. It is not just about the numbers on a screen or the letters piling up on the doormat. Financial stress triggers a genuine physiological response: raised cortisol, disrupted sleep and a near permanent state of fight or flight.

The Mental Health Foundation reports that half of all adults with problem debt also experience a mental health condition. That includes anxiety, depression, panic attacks and in severe cases, suicidal thoughts. The relationship works both ways too. Poor mental health makes it harder to open letters, answer the phone or stick to a budget, which means the debt keeps growing.

Common signs that debt is affecting your mental health include:

  • Difficulty sleeping or waking up in the early hours worrying about money
  • Avoiding phone calls, post or bank statements
  • Feeling irritable, hopeless or withdrawn from family and friends
  • Losing interest in things you used to enjoy
  • Physical symptoms like headaches, chest tightness or stomach problems

If any of those feel familiar, please do not ignore them. Acknowledging the problem is the first step towards dealing with it.

The Debt and Mental Health Cycle

One of the cruellest aspects of debt is the way it feeds on itself. You fall behind on a payment, a late fee gets added, interest compounds and suddenly a manageable balance becomes something much bigger. The stress of watching that happen can paralyse you into doing nothing at all.

That paralysis is not laziness. It is a well documented psychological response. When your brain perceives a threat it cannot escape, it sometimes shuts down decision making entirely. The result is that bills go unopened, creditors are ignored and the situation worsens. This creates a vicious cycle: more debt leads to worse mental health, which leads to more avoidance, which leads to more debt.

Breaking that cycle usually requires outside help, and there is absolutely no shame in asking for it.

How Debt Stress Affects Your Relationships

Financial pressure does not just stay inside your own head. It spreads into your relationships, your work and your home life. Arguments about money are one of the most common causes of relationship breakdown in the UK. Partners may disagree about spending, blame each other for the situation or simply withdraw because they do not know what to say.

Parents dealing with debt often report feeling guilty about not being able to provide for their children. That guilt compounds the anxiety they are already feeling. Children can pick up on household tension too, even when adults try to shield them from it.

At work, the effects are just as damaging. Concentration drops, sick days increase and productivity falls. Some people lose their jobs entirely because they simply cannot function under the weight of financial stress, which of course makes the debt situation worse.

Where to Get Help With Debt in 2026

If you are reading this and recognising yourself, the most important thing to know is that help exists and most of it is free. You do not need to figure this out alone.

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors. An Insolvency Practitioner sets up a realistic repayment plan, typically lasting five or six years. Once in place, your creditors must stick to it, interest and charges are frozen, and at the end of the term any remaining included debt is written off. An IVA can be a genuine lifeline if you owe more than you can realistically repay.

Debt Relief Order (DRO)

A Debt Relief Order is designed for people with relatively low levels of debt and limited assets. As of 2026, you can apply for a DRO if your total qualifying debt is under £50,000 and the application fee has been scrapped entirely, making it free to apply. Your debts are frozen for 12 months and then written off entirely if your circumstances have not improved. For many people, a DRO offers a genuine fresh start.

Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement where a third party negotiates reduced payments with your creditors on your behalf. It is less rigid than an IVA and can be adjusted if your income changes. A DMP does not write off debt, but it does make repayments more manageable and takes the pressure of dealing with creditors off your shoulders.

Bankruptcy

If your debts are simply too large to repay, bankruptcy may be the right option. The current application fee is £680 and you can apply online through the GOV.UK website. Bankruptcy typically lasts 12 months, after which most debts are written off. It is a serious step with consequences for your credit file, but for some people it is the fastest route to a debt free life.

Free Mental Health Support

Alongside getting your finances sorted, looking after your mental health matters just as much. Here are some places you can turn to:

  • MoneyHelper: free, impartial debt and money guidance backed by the government
  • StepChange: the UK’s leading free debt charity, offering advice online and by phone
  • Mind: mental health support, including specific advice on coping with financial stress
  • Samaritans: available 24/7 on 116 123 if you need someone to talk to

You do not need to wait until things are at crisis point. Reaching out early gives you more options and a better chance of getting back on track before things escalate.

Practical Steps You Can Take Today

Getting out of debt does not happen overnight, but there are things you can do right now to start feeling more in control:

  1. Write down everything you owe. Seeing the full picture, while uncomfortable, removes the fear of the unknown.
  2. Check what you are entitled to. Use the GOV.UK benefits calculator to see if you are missing out on any support.
  3. Open those letters. Nothing in an envelope can hurt you, but ignoring them can make things worse.
  4. Speak to someone. Whether that is a debt adviser, your GP or a trusted friend, talking about it breaks the isolation.
  5. Contact us for a free assessment. We can look at your situation and explain your options clearly, with no pressure and no judgement.

You Deserve to Feel Better

Debt does not define you. It is a situation, not a character flaw. People from every walk of life end up in financial difficulty, often through no fault of their own: redundancy, illness, relationship breakdown or simply the rising cost of living.

The link between debt and mental health is real and well documented, but it is not permanent. Getting the right debt solution in place can lift an enormous weight from your shoulders and let you start rebuilding both your finances and your wellbeing.

Get Free Debt Advice Today

If debt is affecting your mental health, Swift Debt Help can talk you through your options. Whether it is an IVA, DRO, DMP or bankruptcy, we will help you find the right solution for your circumstances. Your consultation is completely free and confidential.

Contact Swift Debt Help or call us to take the first step.

Disclaimer: This article is for general information only and does not constitute financial advice. Individual circumstances vary, and you should seek professional advice tailored to your situation before making any decisions about debt solutions.

Person comparing IVA and debt relief order paperwork at a kitchen table

IVA or Debt Relief Order: Which Is Right for You?

Written by Alex Swindells on . Posted in IVA, Debt help.

Updated for 2026

If you are struggling with debt and looking for a way to get back on track, you have probably come across two common solutions: an Individual Voluntary Arrangement (IVA) and a Debt Relief Order (DRO). Both are formal, legally binding debt solutions available in England, Wales and Northern Ireland, but they work in very different ways. Choosing the right one depends on your circumstances, the amount you owe and what you can afford to pay each month.

This guide breaks down how each option works in 2026, who qualifies and the advantages and drawbacks of both, so you can make an informed decision about which route might suit your situation.

What Is an IVA?

An IVA is a formal agreement between you and your creditors, managed by a licensed Insolvency Practitioner (IP). Your IP assesses your income and essential outgoings, then proposes a monthly payment you can realistically afford. If your creditors holding 75% or more of the total debt value approve the arrangement, it becomes legally binding on all of them.

A typical IVA lasts five to six years. During that time, you make a single monthly payment that gets distributed among your creditors. At the end of the arrangement, any remaining debt included in the IVA is written off. You can include most unsecured debts: credit cards, personal loans, catalogue debts, overdrafts and some tax debts.

For more on how IVAs work in practice, StepChange has a detailed IVA guide worth reading.

What Is a Debt Relief Order?

A DRO is designed for people who owe relatively little, have minimal assets and no realistic way of repaying what they owe. When a DRO is granted, your debts and any interest are frozen for 12 months. If your situation has not significantly improved during that period, the debts are written off entirely.

As of 2026, the DRO debt threshold is £50,000, and the application fee has been scrapped completely, making it free to apply. You apply through an approved intermediary, usually a debt adviser at a charity like Citizens Advice or StepChange. The Insolvency Service then decides whether to grant the order.

The gov.uk guide on DROs sets out the full eligibility criteria.

IVA Eligibility: Who Can Apply?

To qualify for an IVA, you generally need to:

  • Owe at least £6,000 in unsecured debt (though some IPs set higher minimums)
  • Have two or more creditors
  • Be able to afford regular monthly payments after essential living costs
  • Live or have a connection to England, Wales or Northern Ireland

There is no upper debt limit for an IVA. Homeowners can apply, and business owners can continue trading while in an IVA, which makes it a flexible option for a wider range of people.

DRO Eligibility: Who Can Apply?

DRO criteria are stricter. To qualify in 2026, you must:

  • Owe no more than £50,000 in qualifying debt
  • Have assets worth no more than £2,000 (your car can be worth up to £4,000)
  • Have a surplus income of no more than £75 per month after essential costs
  • Not be a homeowner
  • Not have had a DRO in the last six years
  • Live in England, Wales or Northern Ireland

The application fee was removed in 2024, so there is now no cost to apply for a DRO. This makes it one of the most accessible debt solutions for people on very low incomes.

Advantages of an IVA

An IVA can be a strong option if you have a regular income and want to avoid bankruptcy. Here are the main benefits:

  • Any debt remaining at the end of the arrangement is written off
  • Your monthly payment is based on what you can genuinely afford
  • Creditors cannot chase you for payment or take legal action while the IVA is active
  • Interest and charges on included debts are frozen
  • Homeowners can protect their property (though equity release may be required in the final year)
  • Business owners can keep trading

Drawbacks of an IVA

An IVA is not without its downsides. You should be aware of these before committing:

  • It lasts five to six years, so it is a long commitment
  • If the IVA fails (for example, you miss payments), you could face bankruptcy
  • Your IVA is recorded on the Insolvency Register, which is public
  • It stays on your credit file for six years from the start date
  • Certain jobs, particularly in finance or law, may be affected
  • You must follow a strict budget throughout the arrangement
  • Homeowners may need to release equity from their property in year five

Advantages of a DRO

For people with very little income and few assets, a DRO offers a quick and affordable way to deal with debt:

  • It is completely free to apply
  • Debts are frozen for 12 months and then written off
  • Creditors cannot pursue you or take legal action during the DRO
  • There are no monthly payments to make
  • It is one of the fastest formal debt solutions available

Drawbacks of a DRO

A DRO comes with restrictions too:

  • You must meet strict eligibility criteria, including the £50,000 debt cap and £75 surplus income limit
  • Homeowners cannot apply
  • It appears on the Insolvency Register for 15 months
  • It stays on your credit file for six years
  • If your financial situation improves during the 12 months, the DRO can be revoked
  • You cannot apply for credit of £500 or more without telling the lender about the DRO

IVA vs DRO: a Quick Comparison

Here is a straightforward comparison to help you see the differences at a glance:

  • Monthly payments: IVA requires regular payments; DRO has no payments
  • Duration: IVA lasts five to six years; DRO lasts 12 months
  • Debt limit: IVA has no upper limit; DRO caps at £50,000
  • Cost to apply: IVA fees are included in payments; DRO is free
  • Homeowners: IVA allows homeowners; DRO does not
  • Credit impact: both stay on your credit file for six years

Which One Is Right for You?

The right choice depends entirely on your personal circumstances. If you have a steady income and can afford to make monthly payments, an IVA lets you pay back what you can afford and have the rest written off over time. It is particularly suitable if you own your home or run a business.

If your income is very low, you have minimal assets and your debts are under £50,000, a DRO could clear your debts in just 12 months with no cost and no monthly payments. It is designed specifically for people who genuinely cannot afford to repay what they owe.

Neither option should be entered into lightly. Both affect your credit rating for six years and appear on public registers. It is always worth speaking to a qualified debt adviser before making a decision. You can get free, impartial advice from MoneyHelper or StepChange.

Get Free Debt Advice Today

If you are unsure whether an IVA or DRO is the right fit, we can help point you in the right direction. Use our free eligibility checker below, or request a call back from one of our friendly advisers. There is no obligation and no judgement, just straightforward guidance to help you take the next step.

Check your options now

Swift Debt Help does not provide financial advice. The information on this page is for general guidance only. Debt solutions may not be suitable for everyone, and fees may apply depending on the solution. Your credit rating may be affected. Always seek advice from a qualified professional before entering into any debt solution.

Pay debt sticky note

How To Clear Council Tax Debt

Written by Alex Swindells on . Posted in Debt help.

If you are struggling with council tax payments, knowing how to clear council tax debt is essential before the situation spirals. When you miss payments, you still owe the money to your local council on top of any future bills, so arrears can build up fast. There comes a point when the council will take action to collect what you owe, and if you fail to pay, there could be serious consequences, including criminal prosecution in some cases.

Fortunately, there are several ways to manage the situation and either clear the debt or have a portion of it written off so you can pay the rest. This guide outlines the options available to you in 2026 and will help you deal with council tax debt before it gets worse.

How to Clear Council Tax Debt: Understanding the Consequences

Row of credit cards

What Are the Consequences of Not Paying Council Tax?

Failing to pay your council tax debts can lead to serious consequences. The severity of the action your council takes depends on how much you owe and how long the debt has been outstanding. Potential consequences include:

  • A Liability Order being issued by the Magistrates’ Court
  • Enforcement agents (bailiffs) arriving at your home
  • Deductions taken directly from your wages or benefits
  • A charging order placed on your property
  • Prison sentences of up to three months for wilful refusal to pay

These are the most drastic outcomes, but you will be given options before these steps are taken. When you first miss a payment, the council will send you a reminder within two weeks. You will be given seven days to pay, and if you make the payment on time, no further action will be taken.

If you fail to pay after receiving a reminder, you will then receive a final notice. This gives you another seven days to pay. If this is your third missed payment within a year, you will get a final notice immediately without a reminder first.

Continued failure to pay will lead to more serious consequences. At this stage, the council may apply to the Magistrates’ Court for a Liability Order against you. This gives the council the right to use enforcement agents (bailiffs) who can take control of your goods to repay the debt. You will also have to pay the court costs, increasing your overall debt. You can avoid this if you settle the debt before your court date.

As well as sending bailiffs, the council can apply to take money directly from your wages (an Attachment of Earnings order) or from your benefits, including:

  • Universal Credit
  • Employment and Support Allowance
  • Pension Credit
  • Jobseeker’s Allowance
  • Income Support

These deductions happen automatically, and you cannot prevent them unless you find another way to pay. If the deductions make it difficult to cover other essential bills, you can discuss this with the council and they may agree to a reduced amount.

In certain circumstances, you can be sent to prison for not paying your council tax. If you are in genuine financial difficulty and there is no way you can afford to pay, it is very unlikely you will face a prison sentence. Courts treat this as a last resort. However, if you wilfully refuse to pay and the court decides you do not have a good reason, you can be imprisoned for up to three months.

A single missed payment can usually be dealt with easily, but if you are in a difficult financial position and you build up significant council tax arrears, the situation can quickly spiral. That is why taking action sooner rather than later is so important.

How to Deal With Council Tax Arrears

Person using ATM machine

1. Do not ignore your debt

The worst thing you can do is ignore your debt and hope it goes away, because it will not. When you miss a payment, contact the council immediately, before they have even sent you a reminder. There are options to help you manage your council tax bill and avoid further missed payments. The quicker you put measures in place, the easier it is to avoid council tax arrears.

Call your council and let them know you have missed the payment because you cannot afford it. Ask about payment holidays or payment plans. Many councils will give you a break from payments or agree to a reduced monthly payment if you cannot afford the full amount. This keeps you paying something, and because the council is aware of the situation, they are less likely to take further action against you.

There is also additional help available to you, and it is important to claim everything you are entitled to. We will discuss this in more detail below.

2. Figure out what you can repay

When you are already in arrears and cannot afford to repay the full amount, you should still offer to pay a percentage of the debt. By paying off a portion, you can delay further action and give yourself more time to get your finances in order. So, you need to figure out what you can realistically afford to repay. This is also important if you are trying to negotiate a reduced monthly payment with the council.

Make a detailed budget listing your income and all of your outgoings. Include small bills like subscriptions as well as your main utility bills. This will give you a clear picture of how much money you have left each month after covering all essential payments. You can then use this figure to make an offer to the council. When working out how much you can afford, make sure you have accounted for everything and do not put yourself in more financial difficulty by offering too much.

The aim is to pay off as much of the council tax debt as possible while maintaining your other financial responsibilities and avoiding further missed payments.

3. Apply for everything you are entitled to

You can apply for assistance if you are having difficulty with your council tax bills. As mentioned earlier, you can ask the council for a payment holiday or reduced payment plan. If you are on a low income, you can also apply for a Council Tax Reduction (CTR). This is a long-term reduction in your council tax bill so it becomes more affordable. Every council has their own process for applications and granting reductions, so you will need to get in touch with yours to find out the details. They usually consider the same factors when making their decision:

  • Your household income, including every adult in the household and all benefits you claim
  • Your circumstances, such as whether you rent or own the property, if you have children, etc.
  • The area you live in

You are not guaranteed to be granted a CTR, but you should always apply because it can make things far more manageable. Depending on your income, you may be entitled to up to 100% off your council tax.

Certain groups are exempt from council tax altogether, so check whether this applies to you. Exempt groups include:

  • Under 18s
  • Full-time students (including student nurses and certain apprentices)
  • People with a severe mental impairment
  • Live-in carers (as long as the person you care for is not a spouse, partner, or child under 18)
  • Diplomats
  • People receiving training funded by the Education and Skills Funding Agency (if under 25)

If you or somebody in your household falls into one of these categories, you may not have to pay council tax at all, or you may qualify for a partial reduction.

There are also income support programmes for people who are struggling financially. If you cannot afford your bills, check whether you are eligible for Universal Credit, Child Benefit, Child Tax Credit, and Housing Benefit, as well as a CTR.

Many people end up in council tax arrears simply because they have not claimed all of the financial help they are entitled to. With a bit of extra support, you may be able to avoid the situation entirely.

4. Consider the Breathing Space scheme

If you need time to get proper debt advice without the pressure of enforcement action, you may qualify for the government’s Breathing Space scheme (also known as a Debt Respite Scheme). This gives you legal protection from creditor action for up to 60 days. During this period, your council cannot send bailiffs, apply for deductions from your wages, or add interest and charges to your debt. You will need to contact a debt advice provider who can assess your eligibility and apply on your behalf.

5. Explore formal debt solutions like an IVA

Council tax arrears can quickly build up, and if you are unable to repay them, you may need to explore formal debt management solutions. An IVA (Individual Voluntary Arrangement) is one option for dealing with council tax debt alongside other debts you owe. You can find out more about what debts can be included in an IVA in our separate guide.

A licensed Insolvency Practitioner will assess your finances and determine how much you can afford to pay each month. They will then make an offer to your creditors and, in most cases, negotiate a portion of the debt to be written off. If your creditors agree to the IVA, you make monthly payments over a typical period of five to six years, after which any remaining qualifying debt is written off. During your IVA, you are also protected against further enforcement action, including bailiffs.

If your debts are smaller, a Debt Relief Order (DRO) may be a more suitable option. A DRO is designed for people with lower levels of debt who have very little disposable income and few assets.

Still Need Help With Council Tax Arrears?

If you are having difficulty with council tax arrears, Swift Debt Help can point you in the right direction. Our team will discuss different debt management solutions with you and guide you through the process, so you can work towards becoming debt free. Fill out the contact form below and we will get back to you soon.

This article is for general information purposes only and does not constitute financial or legal advice. Council tax rules and support schemes can vary between local authorities. If you are struggling with debt, we recommend speaking to a qualified debt adviser who can assess your individual circumstances.

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