Clearing and paying off debt
Dealing with debt, and eventually clearing debt, can be difficult and you might be looking for ways to get rid of your debt. The best way to pay off debt will be different for everyone as it depends on which ways work for you and your situation.
At Lowell, we understand that the main goal of our customers is to be able to clear their debt. However, you might not always be confident in the best ways to get out of debt. That’s why we’ve pulled together this guide to help answer the question ‘How can I get out of debt?’ including information on how to get started with paying off your debt and becoming debt-free with Lowell.
In this guide, we’ll cover:
- Working out which debt to pay off first
- Some of the ways you can clear your debt
- How can Lowell help you to clear your debt
This content is intended to be an impartial guide about clearing and paying off debt. Lowell Financial Ltd do not provide financial advice, you can find out about organisations you can contact for guidance throughout the piece and at the bottom.
When working towards clearing your debt, if you’ve got more than one debt in your name then one of the first steps is usually working out which of them to deal with and pay off first. If you need help figuring out which debts to pay off first you can contact organisations like Citizens Advice and StepChange.
This is particularly helpful if you’re finding it difficult to keep on top of your debt repayments, wondering how to get rid of debt, and perhaps even think you might have problem debt.
Dealing with priority debts
Some debts are classed as ‘priority debts’ as they could have more serious consequences if you don’t sort them out. If you also have other debts that aren’t classed as priority debts, then you can ask your creditors, which are the people you owe, to stop contacting you so that you can clear these debts first.
Examples of priority debts for those living in England and Wales include:
- Mortgage or Secured loans
- Council tax
- Gas and/or electricity
- Child maintenance
- Tax, VAT or National Insurance
- County Court judgments and/or Magistrates Court Fines
- Phone bill
- TV licence
It’s worth noting that for anyone living in Scotland, this may be different and you can find out more information on priority debts from StepChange.
Sorting non-priority debts
Meanwhile, if you don’t have any priority debts or have already dealt with them then you can start looking at your other ‘non-priority debts. Whilst not classed as a priority debt, the result of not paying off these debts could be that your creditors may take further recovery including additional calls and letters.
Examples of non-priority debts include:
- Credit cards
- Unsecured loans
- Catalogue debts
If you do have outstanding debt, then you may be wondering about the best ways to pay off your debt. When it comes to clearing your debt, there are various ways you can do this depending on your personal circumstances and what works for you.
At Lowell, we know how important it is to feel confident in managing your finances and knowing how to clear your debt. That’s why one of our main priorities is ensuring our customers understand the as much as they can about finances and the ways they can clear their debt.
Start to pay your debt through a payment plan
Setting up a payment plan with your creditor is often one of the first steps. This way, you can start making affordable yet regular payments until you have paid everything back. If your circumstances change and the payments are no longer affordable to you then you can let your creditor know who may be able to look into other options that better suit your personal circumstances.
Explore the different types of debt solution
If you’re struggling to keep up with your payments and think you might have problem debt, this might be a sign to explore different types of debt solution. Not every debt solution will be suitable for your circumstances, but you can find out which might be appropriate by speaking to independent organisations for free debt advice such as National Debtline.
For more information on this topic, you can also read our useful guide on all the different types of debt solution.
Consider making a one-off payment
You might find that your circumstances change and you’re now in the position to be able to pay a one-off lump sum payment that would go towards covering a chunk of your debts. To make a one-off payment, you would ask your creditors whether they would accept this as a part payment and write off the rest of the debt. This is sometimes referred to as full and final settlement offers.
If a full and final settlement is agreed by you and your creditors, this should appear on your credit file as the balance being paid including the date. However it’s possible that this debt may then be marked with as ‘partial settlement’ since you haven’t paid the total balance, which could impact your credit file.
Figure out a budget
If you’re struggling to afford your payments, then it could be worth figuring out a budget based on all your outgoings and incomings. That way you can get a clearer view of your finances and know exactly where your money is going and see where you could be saving. To help you figure this out, we’ve even got our own handy budget calculator that does the work for you.
On top of that, we’ve partnered with the free money management app, Snoop, which allows you to see all your bank accounts in one place to help you plan ahead.
Additionally, you might want to see if you can increase your income via benefits. While there are no benefits specifically there to help you with paying off your debt, if you do start claiming benefits then you might find it easier to be able to afford your repayments.
If you’re wondering which debts you might be eligible for, you can use our benefits calculator, powered by entitled to, to find this out. You can also read our guide to benefits and debt which goes through how benefits work with debt in more .
Seek expert advice
If you’re feeling unsure about your next steps with how to start clearing your debt, this is normal. There’s always someone you can ask for help. Seeking expert advice means that you can better understand your own personal situation and the options available to you. In fact, we’ve already got a handy guide going through different places where you can get free independent advice and support if you’d like to find out more.
As mentioned, one of the ways to get rid of debt is by working with your creditor, like Lowell. One of our goals is figuring out the best ways to pay off debt for our customers and ultimately clearing their Lowell debt.
We start this by working together with you to set up a payment plan. Our process of setting up a payment plan means that everything is entirely personal to you, and you can start paying off your debt with us.
Your repayment amount is based which we’re able to find out using our budget calculator tool. To make things as easy as possible for you, we let you have control over your plan and have various ways to pay including online or via our mobile app.
If you’re a Lowell customer and are struggling to make payments or your circumstances have changed then we’d always recommend contacting us and speaking with our friendly team. Once we’ve heard from you, we can take the necessary steps to see how else we can support you on your journey to clear your debt and becoming debt-free with Lowell.
We completely understand if you don’t feel comfortable reaching out to us and we can put you in touch with other independent organisations who can offer you free advice on how to clear debt such as StepChange and National Debtline.
To find out more about debt-related topics and how Lowell can work with you to clear your debt, you can check out more helpful guides in our Debt Guidance hub, or speak to us directly if you’ve got any concerns or questions about paying off your debt.
First published: 6th June, 2023