This only applies to unsecured debts, personal loans and credit cards and the like. If you can prove to the loan company that you have no means to pay your debt, they can, at their discretion, write off some or all of the debt.
eg you have a £10,000 loan and £10,000 on credit cards. The debt management company contacts your lenders and says you cant pay, but will make a payment of £1,000 off each on your behalf now if the lender will write off the remaining balance. If the lender agrees you pay the debt management company £2,000 + a huge fee + interest over about 20 years.
Option 2: phone up the lenders yourself and as long as you can make small regular payments they have to accept and drop the interest to almost nothing (0% in some cases) while you pay off the balance in full.
The only downside is you will find it very difficult if not impossible to get any more credit for the duration of paying off the debt + 5 years.
If you try this approach with secured loans (mortgage) they will repossess your house.
Not paying council tax or water rates can result in jail time
Not paying gas or electric will mean you get a prepayment meter and be charged double the usual price for the supply