Two people can owe the same amount and be in completely different positions. What matters is how your debt compares to your income, and whether you can keep up without borrowing more.
The short answer
- A common rule of thumb: unsecured debt repayments above about 20% of take-home pay are a warning sign.
- Using credit for food, rent or bills is a red flag.
- Only making minimum payments month after month keeps you in debt for years.
- Missing payments or borrowing to repay other debts means it’s time to get advice.
- Free, confidential advice is available whatever the amount.
How can I check my own position?
- Add up your monthly take-home income.
- List your essential costs: housing, council tax, energy, food, travel.
- List your debt repayments and total balances.
- See what’s left. If it’s negative, or very thin, your debt is likely unmanageable.
Our guide to working out a debt budget walks through this.
What are the warning signs?
- You’re using credit cards or overdrafts for everyday essentials.
- You’ve missed payments or had default notices.
- You’re avoiding post, calls or checking your balance.
- Debt is affecting your sleep, health or relationships.
See also 5 signs you might be facing bankruptcy.
What can I do?
If you can repay in a reasonable time, a debt management plan may help. If not, formal options such as an IVA, DRO or bankruptcy can write off what you can’t pay. To see how you compare nationally, see our household debt statistics.
Common questions
Is £10,000 of debt a lot?
It depends on your income and costs. For some people it’s manageable over a few years; for others it’s unaffordable. Look at what’s left after essentials.
How much debt do I need for an IVA?
As a rough guide, IVAs are usually considered for unsecured debts over about £7,000. See how much debt you need for an IVA.
What is a good debt-to-income ratio?
Lenders often prefer total unsecured debt repayments below about 20% of take-home income, but it’s a guide, not a rule.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.