How to clear debt.

List your debts separately, because they don't all behave the same way or carry the same urgency.

First, separate priority from non-priority debt

Debts sort by what happens if you fall behind:

• Priority debts — rent or mortgage arrears, council tax, gas and electricity, court fines, TV licence, child maintenance, and money owed to HMRC. Falling behind on these can mean eviction, repossession, bailiffs, disconnection or court action. They come before non-priority debts, even a card charging three times the interest.
• Non-priority debts — credit cards, store cards, personal loans, overdrafts, catalogue accounts, buy-now-pay-later and money borrowed from family. They damage your credit record if ignored, but the consequences arrive more slowly and are more negotiable.

Behind on priority debts? Get free help today. Stop and talk to a free debt charity now — StepChange or National Debtline. Both are free, confidential, non-judgemental, and will negotiate with creditors on your behalf. Never pay a fee-charging company to do what these charities do for nothing — a fee is money that should be going at the debt.

List every debt on one page

List every debt: who it's owed to, the balance, the interest rate, and the minimum payment. Check your credit report with the main agencies — the statutory reports are free — to catch anything you've forgotten, like an old catalogue account or a defaulted phone contract.

Paying off non-priority debts in order

The common method for non-priority debt is to pay every minimum, then put everything spare towards one debt at a time, in one of two orders:

• Avalanche — highest interest rate first. Mathematically the cheapest route; you pay the least interest overall.
• Snowball — smallest balance first. Psychologically the easiest; you clear whole debts early, each cleared debt frees up another minimum payment.

25%a typical credit-card APR

Pause the interest where you can

Three ways to reduce interest:

• 0% balance transfer — moving card debt to a 0% deal can pause the interest entirely, often for a one-off transfer fee of a few per cent. Every pound then hits the balance instead of the lender. Two rules: have a plan to clear it before the 0% period ends, and never spend on the new card.
• Consolidation, carefully — a single loan at a lower rate can simplify several debts. It only works if you then close or stop using the cards you cleared. If the cards fill up again, you have two debts instead of one.
• Talk to your bank about the overdraft — overdrafts are often among the most expensive borrowing you hold. Banks will sometimes agree a repayment plan or a switch to a cheaper product if you ask;

Buy-now-pay-later is debt too, and missed instalments increasingly show up on credit files.

If the sums don't work

If your minimum payments plus essentials are more than your income, a budget cannot close the gap. These protections exist:

• Breathing Space — a government scheme in England and Wales giving up to 60 days of legal protection from creditor action, with most interest and charges frozen, while you get debt advice. You apply through a debt adviser such as StepChange or National Debtline, not directly. (A separate version for people in mental health crisis treatment lasts as long as the treatment, plus 30 days.)
• Debt management plans and formal solutions — from an informal plan a charity runs for you, through to formal options for serious situations. Which fits depends on your circumstances, and a free adviser will tell you which fits, free and in confidence.
• A benefits and income check — advisers routinely find money people are entitled to and not claiming. It is a standard part of a free debt advice session.

More in than out

Alongside paying debt down, more has to come in than goes out, or the cards refill as soon as you clear them. The fixes are specific: a realistic budget built on real numbers, knowing your survival number so you can see your true floor, and cutting the recurring costs you'd stopped noticing.

Spending money in the plan

A plan with a set amount of spending for yourself, decided in advance as a line in the budget, is easier to keep for the two or three years it takes.

Five steps to start

1. Write every debt on one page: lender, balance, rate, minimum payment.
2. Mark the priority debts — rent or mortgage, council tax, energy, fines, HMRC — and make sure those payments are covered before anything else.
3. Pick your order for the rest: avalanche (highest rate first) or snowball (smallest balance first).
4. Fix your payment on the target debt — a standing amount, not the shrinking minimum.
5. If you're behind on any priority debt, or you're juggling minimums to get through the month, contact StepChange or National Debtline this week. Both are free and confidential.

The free Financial Freedom Score takes about eight minutes and shows you where debt sits among everything else.