The Different Types of Debt

Before you can seek a solution to your financial problems and ease your debt worries, it is important to determine exactly which types of debt are currently affecting you.
Here we run throughout some of the most prominent forms of debt and the debt solutions which can help the affected debtors.


Secured debts are debts which have been borrowed against collateral. This collateral gives the lender a bit of security as it can be repossessed in the event of missed payment(s).

  • Hire Purchase

With a hire purchase, you do not own the vehicle until the last payment has been completed. If you miss a payment, the creditor can repossess the vehicle. Hire Purchases cannot be included in a debt management plan.

  • Mortgage

Mortgages are one of the most common forms of debt in the UK, with millions of households owing money to a bank or a lender for the purchase of their home. A mortgage cannot be included in a debt management plan and can be considered a good debt to have as it is actively securing equity in a home.

  • Secured Loan Debt

Like a mortgage, a secured loan debt uses the debtor’s home as collateral for the borrowing. If secured loan debt repayments are missed, the creditor can apply to the courts to force the debtor to sell their home. Secured loans are often attractive for home owners as lenders will often offer deals with lower interest rates.


Unsecured debts are debts which have been accrued without collateral offered. These can often be included in debt management plans when repayments become too much for debtors.

  • Bank Account Debt

Some bank accounts require a monthly fee or for the owner to pay a set minimum amount into the account every month. Missed payments can result in bank account debt. This debt can be
incorporated into a debt management plan.

  • Credit Card Debt

Credit card debt is the UK’s most common form of unsecured debt with many Britons struggling to make the minimum payments on the debt they have built up with their credit card. Missing payments can be catastrophic with credit card companies adding steep charges and penalties. This makes credit cards a common form of debt included on debt management plans.

Store/catalogue cards can also be incorporated into a debt management plan.

  • Child Maintenance Arrears

If you are struggling to make your child maintenance (colloquially known as child support) payments, it can have huge personal and financial repercussions. Child maintenance is one of the few debts that cannot be included in bankruptcies due to the importance of the debt (it is considered a ‘priority debt’). The most effective way to manage child maintenance arrears is internally, coming to an agreement with family members about a more suitable repayment scheme.

  • Council Tax Debt

UK residents who have not paid sufficient council tax will accrue council tax debts, which will be pursued by the organisation. If you have council tax debt, it is possible to organise a repayment structure with the council well suited to your needs.

  • Doorstep Loan Debt

Doorstep loans are hugely popular with many struggling with financial woes due to their quick and simple process. A doorstep loan company will directly lend cash and approach the debtor by collecting repayments from their doorstep. A doorstep loan can be incorporated into a debt management plan if the debtor cannot fulfil the originally agreed upon repayment structure.

  • Loan Shark Debts

Loan shark debts can be one of the most difficult debts to deal with due to the unlicensed and unregulated nature of the lender. These loans often have incredibly high rates of interest and the lender make use threats, intimidation or violence to receive their repayments. If you believe you have borrowed from a loan shark, call the Office of Fair Trading on 0207 211 8606, to determine whether the company has a license.

If the loan shark does not have a license, contact Stop Loan Sharks on 0300 555 2222 for help and advice.

  • Overdraft Debt

Whilst for many people an overdraft may provide a little financial breathing room, many bank accounts incorporate heavy fines into their overdrafts. An overdraft debt can be incorporated into a debt management plan, to help get your bank account back into positive figures.

  • Parking Fines

An unpaid parking fine is a debt. If you have not paid a parking fine because you disagree with the charge, you can appeal with the local police force with a sight to overturning this decision. If you are unsuccessful, charges may be added and the level of debt may be increased.

  • Payday Loan Debt

Payday loans have grown in popularity and infamy in recent years, offering those with financial woes a quick resolution. However, these loans often come with huge interest rates and can have huge negative impact upon the borrower. If you are struggling to make the repayments of the payday loan, a debt management plan can incorporate this form of debt and an advisor may be able to get the payday loan company to freeze or reduce the charges/rates of interest.

  • Personal Loan Debt

Personal loans can be sought for a wide range of different purposes from financing a car to booking a holiday. If you are struggling to make the agreed upon repayment amounts on your personal loan debt, it can be incorporated into a debt management plan – better structuring your repayment amounts.

  • Phone, TV & Gym Debts

When you sign a contract for phone, TV or gym deals, you will be signing a credit agreement over a fixed period (traditionally 12 months). If you cannot afford to fulfil these payments, you will be required to cancel the agreement in writing.

Upon cancelling the agreement you will still be responsible for fulfilling the outstanding debt.

A debt management plan can help you fulfil the debt with repayments better structured to your financial situation.

  • Income Tax Arrears

Outstanding income tax is considered to be a priority debt (similar to child maintenance) and requires instant resolution. It is possible to contact the HMRC to propose an alternative payment structure, better suited to your income and overall financial situation.

  • Utility Bills

Missing utility payments can be one of the most devastating with service providers cutting off water, gas and electricity to your home. Ensure you do not risk this eventuality by restricting your utility outgoings to an affordable level. Unpaid utility bills can be included in a debt management plan.


For expert advice about coping with debt, visit the In Control homepage or call our dedicated team on 0800 072 6623.