More and more people are experiencing personal insolvency, meaning they cannot pay their debts. In England and Wales, 12,252 individual insolvencies were registered in March, 30% higher than March 2025 and 3% higher than February 2026.
Understanding the Problem
Matthew Sheeran, collaborations partner at Money Wellness and trained debt advisor, explains: "We are seeing more people using credit to get through the month. When that is the approach people are taking, debts can really build up quickly." He attributes this to the rising cost of living, recent fuel prices, and the economic impact of the past few years. "Disposable income has dropped significantly. It does not take much to drag people to a point where they might need debt advice or a debt solution. People just do not have the resiliency they used to have to absorb financial shocks."
However, there is hope. If you are struggling with debt, you can take immediate steps to improve your situation. "You do not need a perfect plan. You do not have to have everything mapped out from point A to the end," says Sheeran. "Just get that plan started." Dedicate a morning to work through these six steps to dig yourself out of a financial hole.
Step 1: Lay It All Out
"Get clear on what you owe to different creditors. So many people bury their heads in the sand and do not know exactly what they owe or who they owe it to," says Sheeran. "Make a list of everyone you owe money to, how much you owe, how much they ask for each month, and the interest rates. This helps you make informed decisions on which debts to prioritise." This step will "unclutter your mind" and help you "unpick" what needs tackling first. "That first step can be painful, but once you have done it, everything feels clearer."
Step 2: Check Your Priority Bills
Before paying off other debts, "make sure your priority bills are covered: rent, mortgage, council tax, energy," says Sheeran. "Those need to be accounted for first. That gives you a sense of what you have left for non-priority debts."
Step 3: Boost Your Income (Where Possible)
"Are there additional benefits you are entitled to?" asks Sheeran. "Many people on Universal Credit are eligible for different elements they are not claiming. Check for council tax support and discretionary funds from your council. Use an online benefits calculator like Turn2Us's. For the average person we have supported, we have noticed they are eligible for an additional £250 a month in benefits. That amount can make a real difference."
Step 4: Access Any Grants You Might Be Eligible For
"Try to receive extra grants, especially if you have priority bill debts," continues Sheeran. "Many utility providers have schemes that can clear your debt if you are in financial hardship. Tap into those resources. Addressing big energy debt makes everything else easier."
Step 5: Speak to Your Lenders
"For non-priority debts like credit cards, get a plan in place that suits your lenders," says Sheeran. "Pick up the phone and speak to your creditors. They can often make payments more affordable, freeze interest and charges, or give you a break from payments for a period." He recommends speaking to every lender directly to set up a plan you can afford, giving you a long-term path to being debt-free.
Step 6: Do Not Take On More Debt
"I have seen customers who do not realise they cannot catch up, and they take out additional debt thinking things will get better. But once debt becomes unmanageable, that is not a sign to take out more credit. It is a sign to get support with the debt you already have," warns Sheeran.
Overwhelmed? Speak to a Professional
"If debt is becoming unmanageable or you see a significant change in your circumstances, pick up the phone and speak to a free debt advice organisation," says Sheeran. Money Wellness, National Debtline, and StepChange offer free support.
