The different types of debt solution

What to do if you're struggling with debt problems

We understand that if you’re struggling with your debt then this can be troubling, which is why our mission is to help our customers on the path to becoming debt-free with Lowell. We’re here to help and work with you so that you can get the support you need whether that is seeking advice or using debt solutions. If you’re struggling with how to get out of debt or need help with debt problems, here are some of the ways you can get information and assistance.

Get independent advice and help

If you’re a customer of Lowell, we can help to put you in touch with organisations that offer free, independent advice and can help you with debt solutions. Independent charities like StepChange can help you to find a solution, or even manage your debt on your behalf. Citizens Advice have a helpful online debt remedy tool, which can help you to work out your options for getting help with debt problems.

If you decide to work with an independent organisation and you would like them to manage your Lowell debt on your behalf, we’ll put your account on hold to give you the time you need to get support and advice. Lowell are committed to helping our customers access the help that’s right for them, so you don’t have to worry about making payments while you’re seeking advice. Once they’ve spoken to you, the organisation will contact us directly to agree an affordable plan.

Remember that support is available

We understand that struggling with debt can make you feel worried and nervous. It can be reassuring to know that you aren’t alone, and that help is available. We work with lots of helpful independent organisations, but if your financial situation is affecting your mental health, remember that it’s okay to ask for help.

Samaritans offer free support and advice to anyone who’s going through a difficult time, and Mind is a mental health charity that can help you to find the right support you might need. We’ve also written a guide on debt and mental health that explores this further and how we support our customers.

Speak to Lowell

If you’re already working with Lowell and your circumstances change, it might mean that your payment plan isn’t affordable or doesn’t work with your budget anymore. If this happens and you feel like you need help paying your debt with Lowell, please do get in touch to talk to us about it.

We know there are lots of reasons why a payment might get missed, so it’s always best to let us know what’s going on and if payments are likely to be missed. If you’re going through a difficult time, we might be able to pause your payments. Whatever your situation is, we’ll make sure you have the time and space you need to get things back on track before we get in touch to talk about the best way forward for you.

If we’ve been in touch about your debt but you’re not working with us yet, it’s important that you speak to us so that we can discuss your circumstances and agree an appropriate solution tailored to you. We’ll always look to help by creating a fair payment plan that is affordable and one that works with your budget. Don’t think of this as ‘paying off Lowell’ but as taking the first step toward becoming debt-free with Lowell.

If you have concerns, please don’t be worried about speaking with us to figure out a way forward. We know having debt can be worrying, but at Lowell, we believe in being open and honest so that our customers feel comfortable discussing their debt.

Different kinds of debt solutions

There are lots of different kinds of debt solutions that can help you repay your debt, or help you with your debt problems. We’ve listed some of the main options for you below, but you can find more information at Money Helper.

Before you decide to go ahead with any of these solutions, make sure that you get free, independent advice from organisations like StepChange or Money Wellness. If you’re already working with Lowell on a payment plan, let us know that your circumstances have changed and we’ll discuss the best way forward for us to work together.

It’s also worth bearing in mind that some of these debt solutions only apply in England – if you live in Scotland, there are different kinds of debt solutions that may be available to you. For more help with Scottish debt solutions, visit Citizens Advice Scotland.

It’s worth noting that the below aren’t official government debt help schemes and are instead formal debt solutions introduced by the government. If you’re struggling, there are other government help schemes available but not specifically for debt.

Some companies use the phrase ‘government debt help schemes’ when advertising their services. Before agreeing to anything, it’s important to speak to an independent organisation for guidance on what is the best debt solution for you.

Debt Management Plans (DMP)

A debt management plan (DMP) is an informal agreement between you and your creditors, putting a plan in place to help with paying your debts.

You’ll agree regular payments to an FCA-regulated debt management company, usually a single payment each month. In most debt management plans, a debt management company will then split this payment and share it out between your creditors, if you have more than one.

Most DMPs are managed by a DMP provider who specialise in helping people to get out of debt. If your debt has been purchased by Lowell and you’re not currently paying off Lowell payment plans with us, these organisations will work with us on your behalf to manage your debt.

You can arrange a free DMP with organisations like StepChange. A debt management plan can help you get out of debt by helping you find a reasonable and affordable payment that can be adjusted depending on your situation, but they can’t be used with some kinds of debt.

It’s worth noting that not every debt management plan is free, and some companies will require a fee for acting on your behalf. For more detail about how these plans can help with paying debt and debt problems, take a look at our guide to debt management plans.

Alternatively, if you're living in Scotland, there is a similar solution called the Debt Arrangement Scheme which we've got a whole guide on. 

Debt Relief Order (DRO)

A debt relief order (DRO) pauses all payments to qualifying debts for 12 months. During this time, you don’t have to make any payments to your creditors, and they won’t take any actions to recover money from you. If your circumstances haven’t changed after the 12 months, all of the debts included in the DRO will be written off.

Debt Relief Orders are intended for people who have problems with debt, and total debts under £30,000. If you don’t own your own home, if you have less than £75 of income left after you pay your bills, and your assets aren’t worth over £2,000, this kind of debt solution could be right for you.

A DRO could help you to get out of debt, though you should bear in mind that a DRO will show on your credit file for six years and could have an impact on applying for credit while it’s on your file. 

The criteria for a Debt Relief Order changed in June 2021, increasing the threshold for qualifying debts. Under the new criteria, you may be able to get a DRO if you have debts under £30,000 (increased from £20,000) and monthly disposable income of less than £75 (increased from £50). For more information, check out our complete guide to Debt Relief Orders.

You can’t apply for a debt relief order on your own. Instead, you can apply through an approved organisation, like StepChange. You can find out more information about how to apply on their website.

Debt relief orders are only available in England, Wales and Northern Ireland. To find out more, you can read our complete guide on Debt Relief Orders.

If you’re in Scotland, a Minimal Asset Process (MAP) is a similar kind of process, but there are different rules involved. For more about MAPs, we’d recommend this helpful guide from StepChange.

Individual Voluntary Agreement (IVA)

An individual voluntary agreement (IVA) is a formal agreement, which freezes your debts and allows you to repay an amount each month over a set period, based on what you can afford to offer to pay. Any money that you still owe after this period, which is usually five or six years, will be written off.

The agreement will be used to pay off your creditors, which are those you owe money to, if you have more than one. Not all debts can be included - examples of excluded debt would be fines and secured credit. Because IVAs are legally binding, once your creditors have agreed you can work with them via the agreement and you won’t have to worry about any legal action.

IVAs can be a good idea if you have a lot of creditors and have previously had difficulties getting out of debt. You’ll need to work with a qualified professional called an Insolvency Practitioner, who will help you to put together a proposal for your creditors. There are also some fees involved with an IVA. You can arrange an IVA through organisations like Money Wellness, and while there’s nothing to pay upfront, some fees may be added to the total you’re paying back.

IVAs are only available in England, Wales and Northern Ireland. If you’re in Scotland, a protected trust deed is a similar kind of process.

Bankruptcy

Bankruptcy is a legal process that clears existing problem debts, but it isn’t the right option for everyone or for every situation. Bankruptcy can be a very serious step, so you should always get independent advice and guidance before you think about taking this route.

If you’ve come to a point where you can’t pay back certain kinds of debts, you can pay £680 to declare bankruptcy through a bankruptcy order. Once a bankruptcy order is over, normally after a year, you’ll be discharged meaning you won’t have to pay back the debts that the bankruptcy order covers.

However, declaring bankruptcy can have very serious disadvantages. Your home and possessions may be at risk, and your credit file could also be affected for up to 6 years. Some jobs also don’t let people who have been made bankrupt carry on working, which is why it’s important to think carefully about your options and get help and advice before proceeding.

If you live in Scotland, rather than bankruptcy, the equivalent debt solution is called ‘sequestration’, but the process is similar to declaring bankruptcy. You can find out more at StepChange.

If you’re a Lowell customer and you’re considering declaring bankruptcy, get in touch with us. Our team is trained to be considerate of your circumstances and we might be able to help or put you in touch with expert advice to see if there are other options available for you.

For more information, read our detailed guide on bankruptcy.

The Debt Respite Scheme (known as Breathing Space)

The Debt Respite Scheme, also known as the Statutory Breathing Space (SBS) scheme, is not a debt solution in the same way as some of the other solutions we’ve listed here. Instead, the SBS scheme, introduced in 2021, is intended to help relieve some of the stress and pressure caused by problem debt, and give you ‘breathing space’ while reviewing your options of how to move forward.

Applying SBS to an eligible debt means that it is put ‘on hold’ for 60 days. During this 60-day period, no interest or fees will be added to your debts, and your creditors won’t take any actions to recover money from you. SBS should not be mistaken for a payment holiday, so you should, where able, continue to pay your debts during this time, but the scheme is designed to give you time and space to get advice and help.

To apply for SBS, you’ll need to speak to an approved debt advisor like StepChange who can provide more information and will submit an application on your behalf if you’re eligible. Whilst the SBS scheme is free, some debt advisors may charge you a fee for working on your behalf.

Lowell are here to help

There are lots of different debt solutions available for people who need help with problem debt. It’s important to consider your options, and get independent advice on your financial situation before you take any actions. 

No matter your circumstances, Lowell are here to help our customers work towards clearing their debt with us. If you’re feeling worried, although we can't facilitate the debt solutions mentioned above ourselves, we can listen to your concerns and put you in touch with other, approved organisations who can help you seek independent advice on your next steps. 

If you have questions about the debt support we offer, take a look at the helpful guides in our Debt Guidance hub, and if you still have concerns, you can always get in touch with us.