Token Payments
Token payments are small, symbolic monthly amounts — often £1 — offered to creditors when you genuinely can't afford anything more, to show good faith while you get back on your feet.
Overview
Token payments are used when your income only just covers essential outgoings, leaving nothing meaningful for unsecured debts. Instead of paying nothing at all, you offer each creditor a small token amount.
The purpose is to demonstrate you're engaging with your debts. Many creditors will freeze interest and pause collection activity in response, while you look for work, wait for benefits to start, or get through a short-term crisis.
Token payments aren't a long-term solution. They're a bridge — usually reviewed every three to six months with your adviser — until you can move to a proper debt solution such as a DMP, DRO or IVA.
Who it's suitable for
- Your surplus income is very low — often near zero
- Your situation is temporary (illness, redundancy, reduced hours)
- You want to keep creditors informed and stop enforcement
- You're waiting for a longer-term solution to become suitable
Advantages
- Shows creditors you're trying to engage
- Interest and charges are often frozen while token payments are accepted
- Reduces the risk of enforcement action
- Very affordable — usually £1 per creditor
- Buys time to plan your next step
Disadvantages
- Not legally binding — creditors don't have to agree
- Doesn't reduce what you owe
- Likely to affect your credit file
- Reviewed regularly — creditors will expect updates
- Not appropriate as a long-term arrangement
Eligibility
General criteria — an adviser will confirm what applies to your circumstances.
- You have unsecured debts you can't currently service
- You have completed a full budget with an adviser
- Your circumstances are expected to change (or need reviewing)
- You're able to write to or contact your creditors (or have an adviser do so)
Example
Aisha, 36 — Birmingham
Aisha was signed off work for six months after surgery. Statutory sick pay barely covered rent and food; nothing was left for £8,900 of credit card and loan debts.
Illustrative only. Names and figures are examples, not real customers.
How it compares
A quick side-by-side of the main UK debt solutions.
| Solution | Region | Duration | Debt written off? | Credit impact | Type |
|---|---|---|---|---|---|
| Debt Management Plan | UK-wide | Flexible | No | Moderate | Informal |
| IVA | Eng, Wal, NI | 5–6 years | Yes (remainder) | 6 years | Formal |
| Debt Relief Order | Eng, Wal, NI | 12 months | Yes (after 12m) | 6 years | Formal |
| Bankruptcy | UK-wide | ~12 months | Yes | 6 years | Formal |
| Breathing Space | Eng, Wal | 60 days | No | Low | Temporary |
| Token Payments | UK-wide | Short-term | No | Moderate | Informal |
| Full & Final Settlement | UK-wide | One-off | Partial | Moderate–High | Informal |
Frequently asked questions
Not sure where to start? We'll walk you through it.
A quick, confidential chat with a friendly advisor. No pressure, no jargon — just a clear picture of the options that suit your situation.