Clearing and paying off debt

Dealing with, and eventually clearing debt, can be a difficult process, and you might be looking for different ways to get rid of your debt. It’s important to remember that the best way to pay off debt will be different for everyone as it depends on what works for you and your situation.

At Lowell, we understand that the main goal for our customers is to be able to clear their debt. However, you might not always know where to begin and find yourself wondering how to achieve financial freedom.

To help answer this, we’ve pulled together this guide including information on getting started with paying off your debt and how you can become debt-free with Lowell.

In this guide, we’ll cover:

  • How to be more proactive with your debt
  • How to pay off debt
  • How Lowell can help you to clear your debt

This content is intended to be an impartial guide regarding clearing and paying off debt. Lowell Financial Ltd does not offer financial advice. You can find out more about the organisations you can contact in our guide on debt help and support.

How to be more proactive with your debt

Here at Lowell, we know first-hand just how debt can impact people and their wellbeing, and that you might not even know where to start. In fact, speaking to our customer panel1, we discovered that not only do 41% of people worry about their debt every day but almost a third (30%) don’t even know how much they owe.

Do people in the UK plan to be more proactive with their debt in 2024?If you’re struggling, it may feel like paying off your debt is an impossible task, but that doesn’t have to be the case. Below are a couple of things to consider if you’re interested in becoming more proactive with your debt.

Make a list of all the debt you owe

To figure out how much you owe, you can check your credit file. You can access your credit file for free through any of the three credit reference agencies – Experian, TransUnion, and Equifax.

Once you have this to hand, you’ll be able to make a list of all the debt you still owe. You may also find it helpful to include other relevant details such as:

  • Who you owe the money, aka your ‘creditors’
  • How much you owe
  • How much you’ve already paid back
  • Your account or reference number
  • If/when you first missed a payment on a debt
  • Any defaults, County Court Judgments (CCJs), or decrees
  • The minimum monthly payment for each of the debts that you owe

Working out which debt to pay off first

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, or 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, who 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:

  • Rent
  • 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:

  • Overdrafts
  • Credit cards
  • Unsecured loans
  • Catalogue debts

How to pay off debt

If you have outstanding debt, you may be wondering about the best ways to pay off your debt. When it comes to clearing your debt, there is no one single right way to do this as it depends entirely 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. It’s important to us that our customers understand that clearing their debt is possible and what different steps they can take in order to do so.

Seek expert advice on how to clear debt

It’s important to remember that you never have to deal with debt alone, there are lots of places you can turn to for financial help and support. However, you should always be wary when it comes to debt advice online as not every source is reliable. 

Instead, get in touch directly with a trusted and regulated organisation like StepChange or MoneyHelper. Once you contact them, you’ll be able to speak with experts who will be able to provide you with support and advice on clearing debt based on your personal situation.

If you’re struggling to get to grips with financial jargon, we completely understand and have created our very own Debt Dictionary.

Figure out a budget

If you’re struggling to pay your debt, 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 even see where you could be saving.

To help with this, we’ve got our own handy budget calculator that does all 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.

Calculate how much you can comfortably pay back

With a budget in place, you can then use this information time to see how much money you can afford to pay towards your debt. As we mentioned previously, priority debts will need to be focused on first. Any remaining money, also known as ‘available income’, can then be used towards additional debt payments or paying other outstanding debts. 

If you’ve got a Lowell debt, you might find it easier to use our debt calculator tool to discover how long it may take you to clear this debt. All you need to do is add details regarding the total outstanding balance with us, payment frequency, and the ideal payment amount. 

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 have changed, and the payments are no longer affordable to you, you can let your creditor know who may be able to look into other options that better suit your personal circumstances.

Each of your outstanding debts will have a minimum amount that you are required to pay the creditor each month. However, only paying the minimum amount could mean it takes longer for you to pay off your debt. This is because, in most cases, interest and other fees will be added to your outstanding balance each month. The minimum payment will then mainly cover these rather than reducing the overall debt you owe.

There are various ways you can start paying off your debts, such as the debt snowball method. When looking into these different methods, it’s best to think about whether it will work for you in the long term. You can also get expert advice from independent organisations, which we mentioned in the previous section, to find out if this is the best way to get out of debt based on your situation.

At Lowell, we genuinely want to help you to clear your debt as soon as possible which is why we don’t add interest or fees if you work with us to manage your account.

Talk to your creditor

If you’re not in a position to keep up with your payment plan, you can speak to your creditor and explain your situation. Having this conversation is a big step but once they understand what’s going on they should be able to offer you further support. This may involve reviewing your current payment plan, offering you Breathing Space, or putting you in touch with other independent organisations for further guidance.

If you’re struggling with a Lowell debt, please get in touch and speak to one of our friendly team members today. Our customers are our top priority and we want to support you however we can on your journey to becoming debt-free with Lowell.

Consider making a one-off payment

You might find that your circumstances have changed 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 upon 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 as a ‘partial settlement’ since you haven’t paid the total balance, which could impact your credit file.

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 the different types of debt solutions. 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.

See if there are other ways you could earn extra money

It might be that there are ways you could earn some extra money to help with paying off debt that you haven’t explored yet.

For example, 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, our benefits calculator, powered by entitledto, can help you figure this out. You can also read our guide to benefits and debt which goes through how benefits work with debt in more detail.

Additionally, you may be able to add some money to your overall household funds by selling unwanted items you have lying around. Alternatively, depending on your situation, you might be able to take on a side hustle that could help with paying off your debt.

How Lowell can help you to clear your debt

As mentioned, one of the ways to start reducing your debt is by working with your creditor. Here at Lowell, one of our main goals is figuring out the best ways to pay off debt for our customers and ultimately clearing their debt with us.

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 on what 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, 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 become 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.

Alternatively, you can manage your account independently through our mobile app. In the app, you can view your outstanding balance, payment history and even access your credit score.

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.


1. Data taken from Lowell’s customer panel of 1,000 people in February 2024