Do creditors have to freeze interest?
No — outside formal debt solutions and Breathing Space, there's no law that forces a creditor to freeze interest. But lenders and debt collectors regulated by the Financial Conduct Authority (FCA) must treat customers in arrears or financial difficulty with forbearance and due consideration. In practice, many will freeze or reduce interest and charges when you show you genuinely can't afford more.
Interest is frozen by law in…
- Breathing Space (most interest, fees and charges on qualifying debts)
- A Debt Relief Order
- An IVA
- Bankruptcy
Interest freeze is requested, not guaranteed, in…
- A debt management plan
- An informal repayment arrangement you set up yourself
- A payment plan agreed after a CCJ (judgment interest rules differ)
What do FCA rules say about customers in financial difficulty?
The FCA's consumer credit rules (CONC 7) require firms to treat customers in default or arrears difficulties with forbearance and due consideration, and to look for fair, sustainable solutions. That applies to banks, card providers, loan companies, catalogue firms, BNPL providers, and most debt collectors and debt purchasers.
Depending on your situation, forbearance can include:
- freezing or reducing interest, fees and charges
- accepting reduced or token payments for a period
- suspending collection while you get debt advice
- agreeing a realistic repayment plan based on your budget
- in some cases, writing off part of the debt
Firms should also take into account any vulnerability (for example, mental health problems or a recent bereavement), give you time to get free debt advice, and not pressure you into paying more than you can afford. Read the rules in the FCA Handbook (CONC 7).
How do I ask a creditor to freeze interest?
Write to each creditor, explain why you're struggling, include a budget showing what you can afford, and ask them to freeze interest and charges while you repay. Asking in writing gives you a record, which helps if you later need to complain.
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Work out your budget
List your income and essential spending. Creditors and free advisers use the Standard Financial Statement (SFS) — a free adviser or the MoneyHelper budget planner can help.
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Pay priority debts first
Rent or mortgage, council tax, energy and tax come before credit cards and loans. See rent arrears, council tax and HMRC debt.
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Share what's left fairly
Divide your spare money between non-priority creditors in proportion to what you owe each one ("pro rata").
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Send the letter and budget
Email or post it to each creditor (keep proof of sending). Start paying your offer straight away so you can show good faith.
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Follow up and keep records
Note dates, names and what was agreed. Ask for any agreement in writing and check your statements to make sure interest has stopped.
Template letter: asking a creditor to freeze interest
Copy and adapt this letter. Replace everything in [square brackets] and attach your budget.
Template letter — copy and adapt
[Your name]
[Your address]
[Date]
[Creditor name]
[Creditor address or email]
Account number: [your account number]
Dear Sir or Madam,
I am writing because I am in financial difficulty and cannot afford my contractual payments on this account. [Briefly explain what has happened — for example, reduced hours, illness, or a relationship breakdown.]
I have prepared a budget, which I attach. After paying my essential living costs and priority bills, I have £[amount] a month available for my creditors. I am offering you £[amount] a month, which is a fair share based on how much I owe you.
Please accept this offer and freeze all interest and charges on my account so that my payments reduce the balance. I understand that under the FCA's rules (CONC 7) you should treat customers in financial difficulty with forbearance and due consideration.
I will start making payments of £[amount] from [date]. Please confirm in writing that you accept this arrangement and that interest and charges have been frozen. If you are unable to agree, please explain why and treat this letter as a complaint.
Yours faithfully,
[Your name]
National Debtline also has free sample letters and fact sheets for different situations.
What can I do if a creditor refuses to freeze interest?
Ask again in writing, then make a formal complaint to the firm. If you're unhappy with its final response, or it hasn't replied within 8 weeks, you can take the complaint to the Financial Ombudsman Service for free.
- Ask for the reason. Check the creditor has seen your budget and understands your situation.
- Get a free adviser involved. Creditors often take proposals more seriously when they come from a recognised debt advice service.
- Complain to the firm. Say why you think refusing is unfair, referring to your budget and the FCA's forbearance rules.
- Go to the Financial Ombudsman. You usually have 6 months from the firm's final response to refer your complaint. The Ombudsman can tell a firm to refund interest and charges if it hasn't treated you fairly.
Keep paying what you can afford in the meantime. If the interest is unmanageable across several debts, consider whether a formal solution would be better.
Which debt solutions freeze interest by law?
Breathing Space, a Debt Relief Order, an IVA and bankruptcy all stop interest on the debts they cover — creditors don't get a choice. Each has different eligibility rules and consequences.
| Option | Interest & charges | How long | Main points |
|---|---|---|---|
| Breathing Space | Most frozen on qualifying debts | Up to 60 days (longer for a mental health crisis) | Applied for through a debt adviser. A pause, not a solution — you'll need a plan afterwards. |
| Debt Relief Order | Stopped | 12 months, then debts written off | Debts £50,000 or less, spare income £75/month or less, assets £2,000 or less. No fee. |
| IVA | Frozen on included debts | Usually 5–6 years | Legally binding once 75% of creditors (by value, of those voting) agree. Unpaid balance written off at the end. |
| Bankruptcy | Stopped on included debts | Usually discharged after 12 months | £680 fee. Assets may be sold; payments from income may last 3 years. |
In Scotland, interest and charges are frozen under the Debt Arrangement Scheme (DAS) and a Protected Trust Deed, which work differently from English solutions.
How long does a DMP interest freeze last?
There's no fixed time limit. When creditors agree to freeze interest in a debt management plan, the freeze usually lasts as long as you keep to the plan and your circumstances haven't improved. Creditors aren't legally bound to keep it in place, so they may review it — typically when your plan is reviewed (often once a year) or if you miss payments.
- Some creditors freeze straight away; others only after a few months of payments, or after they've defaulted the account.
- A freeze can end if you miss payments, cancel the plan, your income rises and you don't increase payments, or the creditor decides your offer is too low.
- If a debt is sold to a debt purchaser, the new owner decides its own policy. Many debt purchasers don't add interest, but check your statements.
- Ask your DMP provider which creditors have agreed to freeze interest, and check your statements regularly.
If a creditor in your DMP keeps adding interest, your provider can ask again or you can complain using the steps above. Read more in our DMP guide and our IVA vs DMP comparison, since an IVA freezes interest by law.
What are the persistent credit card debt rules?
If you've paid more in interest, fees and charges than off the balance of a credit or store card over 18 months, you're in "persistent debt" under FCA rules, and your card provider must take steps to help you.
- At 18 months: the provider must tell you, and encourage you to pay more if you can.
- At 27 months: you'll get another reminder if nothing has changed.
- At 36 months: the provider must offer ways to repay the balance faster over a reasonable period. If you can't afford that, it must show forbearance — for example by reducing, waiving or cancelling interest, fees and charges.
The provider may suspend or cancel your card as part of this. If you're contacted about persistent debt and can't afford higher payments, say so and ask about freezing interest. These rules are set out in the FCA Handbook at CONC 6.7.27 onwards.
Frequently Asked Questions
Can I ask my creditors to freeze interest?
Yes. Anyone struggling to pay can ask. Write to each creditor explaining your situation, include a budget showing what you can afford, and ask them to freeze interest and charges. FCA-regulated firms must consider your request and treat you with forbearance, though they don't have to agree.
Do creditors have to freeze interest?
Not usually. Interest is only frozen by law during Breathing Space and in formal solutions such as a Debt Relief Order, an IVA or bankruptcy. Otherwise, it's the creditor's decision, but FCA rules require firms to treat customers in financial difficulty fairly, and freezing interest is a common way they do this.
How long does a DMP interest freeze last?
There's no set time limit. Usually the freeze stays in place as long as you keep to your debt management plan. Creditors can review it, often at your annual plan review, and may restart interest if you miss payments or your circumstances improve. Because it's voluntary, it isn't guaranteed.
Will freezing interest affect my credit file?
Usually, yes. If you pay less than the contractual amount, the creditor will normally record an arrangement to pay or a default on your credit file. Defaults stay on your file for 6 years from the default date. The benefit is that your payments then reduce what you owe.
What can I do if a creditor won't freeze interest?
Make a formal complaint to the creditor, explaining why refusing is unfair given your budget. If you're unhappy with its final response, or it hasn't replied within 8 weeks, you can complain to the Financial Ombudsman Service for free. A free debt adviser can also negotiate for you.
Let a free adviser negotiate for you
Free debt advice services can contact your creditors, ask them to freeze interest and check whether a formal solution would suit you better.