Possible solutions to coerced debt

The information on this page relates to England and Wales.

If you have been forced to make transactions that led you into debt, or if you have had debts fraudulently built up in your name, this is known as coerced debt.

This resource provides information about the possible solutions to coerced debt, that may free you of being chased by creditors and / or help you to access justice.

What debt solutions exist?

It can be very difficult to get coerced debt recognised by the courts and/or creditors (the people you owe money to) because they often assume that couples are a financial unit. You will usually be responsible for any debts that are in your name. There is no general exception for people who have experienced economic abuse and have been coerced into debt. 

However, there are a number of debt solutions that you may wish to discuss with a qualified debt adviser and/or a legal adviser. These include:

• pursuing a criminal prosecution
• challenging the liability of the debt
• asking for a debt write-off
• debt management solutions
• insolvency

The right option for you will depend entirely on your circumstances, and it is important to seek debt advice before taking any action. 

Debt respite scheme

The government has introduced a formal debt respite scheme called Breathing Space. It is designed to give you time to receive debt advice and decide on a solution that’s right for you. The scheme stops creditors taking action to chase debts for a period of 60 days.

There are two types of scheme – standard breathing space and mental health crisis breathing space, for people who are receiving mental health crisis treatment.

The scheme prevents possession action being taken on your home, fees and charges cannot be added to your debts during this period, and new found debts can be added. Debts covered by the scheme include council tax arrears, rent/mortgage arrears, energy arrears, credit cards, store cards and personal loans. The scheme does not stop creditor action on debts that are not included in the scheme, or on arrears accrued after the breathing space starts. 

You will need to apply for Breathing Space through a qualified debt adviser. Your debt adviser can advise if this scheme is suitable for you.

Prosecution for controlling or coercive behaviour 

The Serious Crime Act 2015 made controlling or coercive behaviour in intimate or family relationships a criminal offence. Economic abuse is included in a list of the types of behaviour associated with control or coercion. This law, therefore, means that someone could potentially be prosecuted for economic abuse, including coercing someone into debt. We have more information on pursuing a prosecution against an abuser.

If you wish to pursue a prosecution, a solicitor or legal adviser can support you to do this. The Law Society provides details of local solicitors and legal advisers. Organisations such as Rights of Women may also be able to support you with advice and information about your legal rights. We have more information on accessing legal support.

Challenging the liability of coerced debt 

There are legal principles and protections in UK law that may make it possible to challenge the liability for coerced debt. 

Consumer credit law 

All organisations providing credit must abide by the principles of consumer credit law and the regulations of the Financial Conduct Authority to treat customers fairly. 

Challenges can sometimes be made if a lender has not upheld their legal obligations. These include properly assessing that a customer can afford the repayments, and checking that they have not been forced into agreeing to the debt. 

Legal protections 

A contract with a creditor may be invalid if any of the following apply: 

• economic duress, where one party is pressured or threatened into making or changing a contract 
• undue influence, where a contract is entered into because of an abuse of a relationship of trust and confidence 
• misrepresentation, where a contract is entered into as a result of an untrue statement

A contract is not automatically invalid in these circumstances and it is often at the court’s discretion. However, in some cases these principles can be used to challenge the liability for the debt. Usually, the pressure, threat or untrue statement must come from the creditor, not from a third party (such as the abuser). 

Fraud 

Challenges to the liability for the debt can also be made in cases of fraud – if the debt was taken out in your name without your knowledge. Fraud is illegal, and laws exist to support people who have had debts fraudulently built up in their name. 

You may wish to seek legal advice if you wish to challenge the liability for the debt in any of these ways. We have more information on challenging the liability of coerced debt.

If challenging the liability for the debt is not right for you, there are many debt solutions that you may wish to consider and discuss with a qualified debt adviser. 

Debt write-off 

If you have been coerced into debt, you may wish to clear the debts and make a fresh start. It may be possible to ask creditors to write debts off on the basis of economic abuse. 

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

Insolvency 

If you are unable to pay the debts you owe, you may be able to apply for insolvency. There are different criteria for each insolvency solution, and some have long-term consequences. 

• Bankruptcy is a way of writing off debt if repaying is not possible. While you are bankrupt, any assets that you have might be used to pay off your debts. After a period of time (usually one year), most of your outstanding debts will be written off and you can make a fresh start. 
• A debt relief order (DRO) can be entered into if you meet certain criteria, including having debts up to the value of £30,000. A debt relief order last for one year, during which time your debts will be frozen. If you still meet the criteria at the end of the year, most of your debts will be written off. 
• An individual voluntary arrangement (IVA) is a formal arrangement put together by an insolvency practitioner with your creditors to repay all or part of your debts. The arrangement is for a set period of time, normally five years. 

Debt management 

There are also solutions to make repaying the debt more manageable. 

• An administration order is a formal and legally binding agreement between you and your creditors to pay back your debts over a period of time. To be eligible, you must have an unpaid county court or high court judgment against you that you cannot pay in full. Your debts must also be less than £5,000. 
• A debt consolidation loan (DCL) is a way to simplify, but not to clear debts. You can merge all your debts together into one loan to make it easier to keep up with repayments. 
• A debt management plan (DMP) is an informal arrangement that allows you to repay debts at a more affordable rate. You deal only with the DMP provider, who liaises with creditors on your behalf to find a workable solution.

Choosing a debt solution 

There are advantages and disadvantages to each debt solution, and the right option will depend on your circumstances. 

It is important to seek debt advice before taking any action. If you have been coerced into debt by an abusive partner, a qualified debt adviser can talk you through the options available to you based on your situation. This information should not be used as a replacement for speaking to a qualified debt adviser. 

There are a number of organisations that you can contact for support, information and advice if you have been coerced into debt. 

Last updated August 2021

Further support

If you are experiencing economic abuse, you are not alone. We have more information that can support you to take steps towards safety and begin to regain control of your finances.

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