I see three options for you.
Firstly, you can take out a consolidating loan to pay off your multiple creditors in one go and reduce everything to a single, affordable monthly repayment. However, you may struggle to find a lender who will make this cost effective for you. If you go to a “payday loan” company, that will drive you deeper into debt as their interest rates and repayment terms are extortionate.
Secondly, you can apply to make yourself personally bankrupt. You can make the court application yourself online and will need to provide full details of your existing debts, income, and assets. The court fee is currently £680 and all you will need to do is satisfy the court that you are unable to pay your debts as they fall due over the next 12 months. You will be unable to borrow money for at least a year while the bankruptcy is administered, but your creditors will be unable to sue you through the civil courts for repayment of your debts. Your existing cash and personal assets will be used to repay your debts as far as they are able. Your unsecured creditors will only receive a few pence in the pound of what you owe. Once the bankruptcy is discharged, this will have the effect of “wiping the slate clean” of all your debts and you will be able to borrow money again. However, the fact that you were made bankrupt will remain on your credit record and it may prove very difficult in practice for you to obtain credit in future even long after your bankruptcy was discharged.
Third and finally, you can enter into an Individual Voluntary Arrangement (“IVA”) with your creditors if you owe over £6,500.00 and are struggling to make repayment. An IVA is essentially a contract between you and your creditors that does not involve the court and is not as extreme as bankruptcy, whereby you agree to repay part of your debts. An IVA can only be set up by an authorised Insolvency Practitioner (“IP”). Their fees can be quite high, so make sure you ask how much they will charge before accepting their retainer. The IP will work out what you can afford to repay and how long the IVA should last. You will have to give full details of your assets, debts, income, and creditors. Your IP will contact your creditors and ask if they will agree to the proposed terms of the IVA. The IVA will start if the creditors holding 75% of your debts agree to it. It will apply to all your creditors, including any who disagreed to it. Your IVA will be added to the Individual Insolvency Register and removed three months after the IVA has ended. However, the fact that you have entered into an IVA with your creditors will remain on your credit record and you may have to declare it before you request borrowing facilities from a new potential creditor for the rest of your life. As a result, it may prove difficult to obtain credit in future.