If you have been coerced into debt, clearing the debts may help you to make a fresh start.

If the debt has been caused by the abuser’s behaviour, you may wish to ask creditors to write off the debt. A qualified money adviser can help you to speak to your creditor. Whether or not a lender will write off the debt will depend on their own policies and procedures.

We have more information on asking a lender for a debt write-off here.

Breathing Space is a debt respite scheme that stops creditors from taking action against you for 60 days. This is designed to give you time to decide on a solution that’s right for you.

You will need to apply for Breathing Space through a qualified money adviser. They will be able to let you know if you are eligible for the scheme and if it is the right option for you.

Only certain debts are covered by the scheme and you must meet the eligibility criteria. You will still need to make repayments on certain debts during this time.

If you are granted ‘breathing space’, it will protect you from actions such as:

• repossession of your home
• fees and charges being added to your debts
• bailiffs contacting you.

You can find out more information about the Breathing Space scheme on the National Debtline website here.

If you can’t pay your debts, you may be able to apply for insolvency. There are different insolvency options and the right one for you will depend on your circumstances. Insolvency can have long-term consequences so it is very important to speak to a qualified money adviser.

• Bankruptcy is a way of writing off debt that you cannot repay. While you are bankrupt, things that you own could be used to pay off your debts. Bankruptcy usually lasts for 12 months and after this time, most of your debts will be written off. However, the bankruptcy will stay on your credit file for at least six years, which may make it harder for you to take out a loan or phone contract. There is more information about bankruptcy on the Government’s website here.
• You may be able to apply for a debt relief order (DRO) through a qualified money adviser if your total debt is no more than £50,000 and you meet the eligibility criteria. A debt relief order lasts for one year. During this time, your debts will be frozen meaning you won’t have to make repayments on certain debts or pay interest or any charges. Depending on your situation at the end of the year,  your debts may be written off. There is more information about debt relief orders on the Government’s website here.
• An individual voluntary arrangement (IVA) is a formal plan to repay all or part of your debts. There is a fee that providers charge to set up and administer the arrangement. IVAs usually last for five years. During this time, no further interest will be added to your debts and any unpaid debts included in the arrangement are usually written off at the end. Find out more information about individual voluntary arrangements on the National Debtline website here.

Your safety

If you apply for any of these forms of insolvency, your name (including previous names) and address will usually be made available publicly on the Individual Insolvency Register. If this would put you at risk of harm from the abuser, you can apply for a Persons at Risk of Violence (PARV) order to stop your name and address from being listed. There is an application fee for the PARV order, and it is important you apply as soon as possible.

Money Helper has more information on these insolvency options on their website here.

Debt management can make repaying your debts less overwhelming.

• An administration order is a way to deal with debt if you have a county court or High Court judgment against you and you cannot pay in full. Your debts must be no more than £5,000 in total. Creditors named in the order cannot take action against you without the court’s permission. You make one payment a month to your local court, which the court will divide between your creditors. There is no upfront application fee, but the court takes a percentage of your monthly payments to cover their costs. Find out more information about administration orders on the Government’s website here.
• You may be able to set up a debt management plan (DMP) with your creditors if you can afford to pay a small amount each month or may be able to do so in the near future. You can arrange this yourself or through a debt management company. If you arrange this with a company, you will make payments to them and they will share this between your creditors. StepChange and PayPlan provide this service for free, while other debt management companies may charge a fee. Find out more information about debt management plans on the Government’s website here.

In some cases, it may be possible to challenge the liability for coerced debt. This means getting an agreement from the creditor that you are not responsible for paying back the debt. 

It is important to get legal advice if you wish to challenge the liability for the debt in any of the following ways.  

Consumer credit law   

The Consumer Credit Act 1974 is a legal framework for all unsecured money lending to individuals in the UK. It outlines the ways in which lenders must treat customers fairly. This includes:   

• thoroughly checking that a customer can afford the repayments 

• providing clear and comprehensive information before entering into a credit agreement 

• taking certain steps before enforcing any unpaid debt, such as issuing default notices

The Financial Conduct Authority’s Consumer Duty also requires firms to put their consumers’ needs first, particularly customers who are vulnerable or at risk of harm. The FCA has also encouraged firms to be “alert to the possibility of coercion and financial control to reduce foreseeable harm”. Read more on the FCA’s website here. 

Legal protections  

A contract with a lender may not be valid if any of the following things have happened: 

• Economic and/or physical duress: If a creditor or an abuser pressurises or threatens you into taking out credit. 

• Undue influence: If a creditor or an abuser uses their position of trust to influence you to take on a credit agreement.  

• Misrepresentation: If the creditor gives false or misleading information to make you enter into a credit agreement.

As this is a complex area of law, it is important that you try to seek legal support if you think any of these might apply to you. You can find about organisations that can give legal advice on our website here.  

Fraud  

If the abuser has built up debt in your name without your knowledge, this is fraud. Fraud is illegal, and there are laws in place to support you.  

Steps you can take 

If you think your lender has been unfair or irresponsible when lending to you or the abuser has fraudulently taken out debts in your name without your knowledge, there are steps you can take.  

You may decide to raise this with your lender directly and they should provide you with appropriate support. 

If you are dissatisfied with your lender’s response and have received a final response letter from them, you can contact the Financial Ombudsman Service to make a complaint about the lender.  

You can find out how to complain to your lender and how to make a complaint about your lender to the Financial Ombudsman Service on its website here.