How To Get Out of Debt Without a Loan

How to get out of debt without a loan

Sometimes trying to manage your debts can feel like a vicious cycle of borrowing to pay. When you’re struggling to repay debts it may seem like taking out further credit is the only option, but we’re here to tell you there are options out there to get ahead of your debts without taking on any more. 

From budgeting to repayment strategies, debt solutions, and payment relief schemes, here are some options for repaying your debts without taking out further loans.

Focus on your budget

Begin by thoroughly examining your income, expenses, debts, and assets. Create a budget to track your monthly spending and identify areas where you can cut back.

Chances are there are a number of places you’re spending far more money on than you think or are paying for subscriptions and services that you either don’t use or could live without.

Once you have a more clearly defined picture of your finances and outgoings, it’ll be easier to plan your financial future more realistically.

This will also help you gain a clearer understanding of your financial health and determine what you can afford to repay.

Seek out the solution

Did you know that a loan isn’t the only way to consolidate debt repayments? Debt solutions are agreements between you and your creditors to pay back your debts at a rate you can afford. They don’t involve getting into more debt, and depending on which solution you choose, they could reduce the total amount you have to repay.

If you contact MoneyPlus Advice, we’ll review your income and expenditure to work out what you can realistically afford to repay each month. If that’s lower than what you’re paying now, we’ll propose this lower amount to each of your creditors, and work to get interest and charges frozen.

On a Debt Management Plan, your debts will then be repaid at this rate over an extended period of time, with an Individual Voluntary Arrangement, you’ll repay what’s affordable for a set period of time, usually 5 or 6 years, and then anything remaining will be written off. For free debt advice, you can also visit MoneyHelper. 

What are debt solutions?

Did you know that a loan isn’t the only way to consolidate debt repayments? Debt solutions are agreements between you and your creditors to pay back your debts at a rate you can afford. They don’t involve getting into more debt, and depending on which solution you choose, they could reduce the total amount you have to repay.

When you contact MoneyPlus Advice, we’ll review your income and expenditure to work out what you can realistically afford to repay each month. If that’s lower than what you’re paying now, we’ll propose this lower amount to each of your creditors, and work to get interest and charges frozen.

On a Debt Management Plan, your debts will then be repaid at this rate over an extended period of time, with an Individual Voluntary Arrangement, you’ll repay what’s affordable for a set period of time, usually 5 or 6 years, and then anything remaining will be written off.

What is debt advice?

Debt advice looks at your finances as a whole to work out how much you can afford to pay towards your debts. MoneyPlus Advice is one of the UK’s largest and most trusted providers of professional debt advice. If you’re looking for a way to take control of your finances, make sure that your debts are being repaid, and start the journey towards a new financial future, we have your back.

Our team specialises in providing FCA-regulated debt advice and we understand that everyone’s financial situation is unique. Whether you’re looking for advice on managing your debts, or you’d just like some information about what other options are available to you, we have a dedicated team of experts ready to help

Apply for breathing space

Breathing Space is a debt respite scheme introduced in 2021 to help people catch their breath, and get in control of their debts. Breathing Space is a government scheme that allows you a grace period from your debts for up to 60 days, or longer for people currently going through serious mental health concerns.

It works in two ways:

Standard Breathing Space: The standard form of the scheme is available to anyone who hasn’t already entered the scheme in the last 12 months. By entering Breathing Space you are granted legal protections from your creditors, halting repayment efforts and contact for up to 60 days. Entering breathing space can give you a chance to get ahead of your debts and put plans in place for longer-term support such as a debt solution. 

Mental Health Crisis Breathing Space: As the name implies, this form of breathing space is reserved for people currently receiving treatment for mental health crises. It offers people in this vulnerable position stronger legal protections from creditors that last for the duration of the person’s treatment, as well as a further 30 days (regardless of the length of treatment). To apply for this type of breathing space you’ll need to provide evidence from a qualified mental health professional. 

Breathing Space can be a good way to put some space between you and your creditors and allow you the time to come up with a more permanent repayment solution, free from the worry of trying to keep up with payments. 

You can learn more about Breathing Space on our solution page.

Help Schemes and Benefits

Several grants and schemes for people out there can allow them to more easily repay their debts. Many of these schemes go unused or are not taken advantage of so here’s a low down to make sure you don’t miss out. 

Local council grants: These can change depending on where in the UK you currently reside, these grants are for those who are in financial crisis and there are several eligibility factors to consider before applying

Government benefits: Benefits schemes such as job seekers allowance, universal credit, disability allowance, and others are government schemes to help fund those in need. There are a number of government benefits schemes and many of them have varying eligibility requirements. This year it was estimated that over £19bn in UK benefits go unclaimed, meaning many are either unaware or passing up their opportunity for government help.

Supplier support schemes: If you are unable to pay your energy bills you may be able to apply for a fuel voucher. You can do this through either your local government or by reaching out to your energy provider.

To find out if you’re missing out on support, check out the benefits calculator on Turn2Us.org.uk

Contact your creditors to negotiate repayment options  

It might seem preferable to ignore or avoid creditor contact when dealing with debt, however, contacting your creditors and being honest about your financial situation can often be vital in arranging more manageable repayment options.

Creditors have an obligation to ensure that agreeable repayment methods are offered before attempting to take legal action in recovering your outstanding debts. This means that getting in contact with your creditor is the best option for finding a more agreeable repayment rate for your debts. 

Seek professional debt advice

Most importantly, if you are struggling with unmanageable debts you should seek professional debt advice as soon as possible. 

By contacting a debt advisor you can get a full breakdown of all your debts and finances, allowing you to assess your current financial situation and get the best advice on options for repaying your current debts. 

A debt advisor can also help you set up a debt management plan, a financial agreement designed to help those struggling to repay their debts. There are many options for debt solutions, so it’s important to do your research when deciding what may help you. 

For free debt advice from a professional debt charity, you can visit MoneyHelper 

To learn more about MoneyPlus and the service we provide click below.