EyeOnKey terms A–Z
Quick definitions in plain English. Meanings and rules can vary by country and provider.
- Breathing space
- A temporary period, in some countries, when creditors must pause action while you get help.
- Charity or non-profit credit counselling
- Support from an accredited organisation to review your budget and options.
- Creditor
- A person or company you owe money to.
- Debt avalanche
- Paying the highest-interest debt first to reduce total interest.
- Debt collection agency
- A company that collects debts on behalf of a creditor.
- Debt consolidation
- Combining several debts into one, often with a single payment.
- Debt management plan (DMP)
- An informal arrangement where you make a single monthly payment, which is shared among creditors.
- Debt relief
- A general term for reducing or cancelling part of what you owe.
- Debt snowball
- Paying the smallest debt first, then rolling that payment onto the next.
- Disposable income
- What is left after essential costs are paid.
- Free debt advice
- Non-profit services that help you review your options without charge.
- Income and expenditure
- A statement of your income and spending, used to work out what you can afford.
- Individual voluntary arrangement (IVA)
- A formal, legally binding agreement to repay part of your debts over time. Specific to some countries.
- Non-priority debt
- Debts such as credit cards and store cards that have less serious immediate consequences.
- Priority debt
- Debts with serious consequences if unpaid, such as rent, mortgage, energy and council tax.
- Settlement
- An agreement to pay a lower amount to close a debt.
- Statute-barred debt
- A debt that creditors can no longer take court action to recover after a set time. Rules differ by country.
The range of approaches
At the simple end, debt management means deciding an order and amount for repayments and following it — for example tackling the highest-rate debt first (often called avalanche) or the smallest balance first (snowball). Both are self-managed and cost nothing but discipline.
At the other end, a debt management plan is an arrangement, usually organised through a non-profit advice organisation, where you pay one affordable monthly amount and it is distributed among creditors, often alongside requests to freeze interest or reduce payments. Availability and practice differ by country.
What creditors can agree to
Creditors in most markets would rather receive steady reduced payments than force a default, so they often agree to temporary interest freezes, reduced payments or short payment holidays when the alternative is worse for them. These agreements are usually informal and can be revisited if circumstances change.
Anything agreed is worth confirming in writing, including whether interest or fees are actually stopped rather than merely reduced. A verbal arrangement that quietly continues to accrue interest can leave a larger balance than expected when the plan ends.
Effects on credit files
Reduced payments often mean the accounts are technically behind their original terms, which can appear on credit files even when creditors have agreed to the plan. This is one of the honest trade-offs of a managed plan: the record may show the difficulty while the plan addresses it.
As balances fall and the plan concludes, the history ages and its weight diminishes. A completed plan followed by consistent on-time behaviour is a normal starting point for rebuilding, not a permanent barrier.
Choosing between the routes
The right route depends on the arithmetic: total debt, interest rates, income stability and how long a realistic repayment would take. If the numbers work within a few years, a self-managed plan preserves the most control. If they do not, a structured plan or a formal process may fit better — and that assessment is where free, qualified debt advice earns its place.
The calculators here can frame the arithmetic honestly: the avalanche and snowball calculators show self-managed routes, and the debt-free date calculator shows the finish line for any plan.