16 Mar 2021

How to manage debt

Managing debt can be a daily struggle, particularly when finances are tight. It is never easy working out which payments to prioritise and where to turn when you need help with debt, particularly when there is so much conflicting information online. 

Galahad & Co. are experts in consumer credit and offer effective support to anyone who needs help with debt. This is a big subject, so we have set out a couple of our best tips on managing debt. 

What is manageable debt?

Debt is not always a bad thing. In fact, it is often necessary. Many adults in the UK rely on debt in ways they may not even realise. Think about things like phone contracts, mortgages, car finance and even paying your council tax or car insurance on a monthly basis (rather than making one big annual payment). You may even have a loan which you pay back each month or a credit card which you pay off in full at the end of each month. These are all common forms of debt.

Manageable debt is debt that you can easily pay when the payments are due. If you have debt and credit commitments which you pay each month without putting pressure on your essential living costs (such as rent or food shopping) then this is manageable debt. And it’s not a problem.

If, however, you find that you do not have enough money to manage these payments, or that you are not left with enough money each month to cover other expenses, then your debt has become unmanageable and it’s time to start doing something about it. 

One particularly worrying sign is if you need to borrow more each month just to make these payments. Turning to payday loans, or putting essential spending on credit cards, should be a red flag that debt is unmanageable. 

How to manage your debt effectively

If you think that your debt is – or could soon become – unmanageable, the sooner you act, the better. We know that is much easier said than done, but one of the most important things you can do is not borrow any more money. This includes building up the balance on existing credit cards.

Galahad & Co. have helped hundreds of people who have been stuck in long term debt. Each of those people were managing debt effectively for many years before it became a problem. They would tell you themselves that managing debt as soon as it becomes a worry is the very best thing you can do to escape the cycle of increasing debt.  

Whether you think that the debt problem is likely to be long term or if you hope it will only last a couple of weeks, the best thing you can do is to speak to your lenders and any other companies who you pay on a regular basis. Speaking to your lenders may sound scary, but you will be surprised how easy it is as soon as you pick up the phone. 

Remember that these are big companies who can cope with you delaying your payment by a few weeks or even months. Explain your situation to them honestly and they will be happy to help – in fact, lenders have to help if you tell them that you are struggling to meet essential living costs. We’ve put together some advice about speaking to your lenders here. 

If the thought of speaking to your lenders makes you nervous, please don’t shy away from managing your debt problem. There are companies out there that can help you have these conversations with your lenders, or at least provide template letters for you to send. The important thing is to do something, and make sure this is something you are in control of. 

Getting a solution which puts you back in control is the best way to manage your debt effectively. 

How to manage multiple debts

If you have started to look for a solution to manage multiple debts, you are probably already confused by the number of different solutions advertised online, all of which will claim they are the only way for you to get debt-free. 

The truth is that there is a lot you can do yourself, even if you are managing multiple debts from more than one company that claims you owe them money. 

There are many companies who make money by helping people in debt. Some of these do excellent work and are well worth the fees that you will pay for their help. Others are unscrupulous cowboys (cowpersons?) who will sell you a solution that you do not want or need. But how can you tell the difference? 

The problem is that most of these companies will contact you when you are at your lowest point, when you feel trapped and helpless, in need of a solution. In other words, desperate. 

At this stage, your instincts will have taken a back seat and you will not be approaching the decision reasonably. You should never feel pressured into agreeing a debt solution. Shop around and take your time. 

Remember that no solution is without drawbacks, you should make sure that you know what these are before entering into any agreement. If you are being put under pressure to sign something or feel discouraged from taking independent advice, alarm bells should be ringing.

Take a step back and give yourself some time to think about it. Of course, debt is an incredibly personal problem and it is easy to feel overwhelmed and isolated – but you are not alone, and you always have options. 

Nothing moves quickly in the consumer credit industry. There is useful information on our site about how long debt collectors can pursue debt, but as a general rule of thumb, the debt will not escalate if you do not pay for a couple of months. Look out for a default notice, this is usually the first step in any lender pursuing you for debt.

One of the most important sources of advice in our day-to-day life is the opinion of friends or family. The problem is that debt can be embarrassing, and it carries a stigma and causes anxiety. This means that the last thing you want to do is talk about it, but if you can find someone to share with, they might just see something that you have not realised or steer you away from a company who is putting you under pressure to make payment.

Talking about debt is the most important thing you can do to help manage debt effectively. 

Only once you’ve taken these steps and are able to think clearly about the options available to you, you should think about getting professional advice. A summary of the available solutions to manage debt and some of their drawbacks are set out below. 

Debt Management PlanYou make small, affordable payments to each of your creditors.A good first step to getting on top of unmanageable debt.It may take many years to pay back everything you owe.
IVAInsolvency: an agreement to pay a portion of your debt over 5 to 7 years.If you own property you may be able to keep this.Many! You have no control – 25% of IVAs fail leaving you in debt.
BankruptcyInsolvency: when a court orders your creditors to accept your assets in exchange for writing off the debt you owe.You are only bankrupt for one year, during which time you will only contribute your disposable income.If you are earning a lot less than usual for the year that you are bankrupt, you may be told to pay for an additional 3 years.
Debt Relief OrderInsolvency: similar to bankruptcy but for people who owe less and have few assets.Lasts for one year and only costs £90 to set up.Just like IVA and bankruptcy, DROs have a severe impact on your credit rating.


Before entering into any agreement or debt management solution, it is important to seek expert advice. There may be other ways to challenge your creditors, who may not be able to prove a penny of what they say you owe. 

At Galahad & Co., we are experts in this area of law and the help which is available to you. If you are worried about how to manage debt why not get in touch? Our friendly team is always happy to help.