With our fantastic guide to debt management plans (DMPs) on the BBC...
Our top 10 debt myths
Being in debt can cause all sorts of emotions, and contacting someone for help for the first time can be extremely daunting.
Our advisors are used to dealing with people who are in a frightened and emotional state. We often deal with people who feel vulnerable, worried about what action their creditors can take and what the future holds for them.
What will happen?
Amongst the cocktail of feelings is fear of the unknown and we’re commonly asked these kinds of questions:
With all these questions (and many more) swimming around, it’s no wonder that people often call us in a panicked state, worried about what can and can’t happen.
So with this in mind, we’ve compiled a list of our top 10 debt myths to help put your mind at ease.
Many of these we hear on a daily basis from people that genuinely believe that they’re true. Why not test yourself and count the number you thought we’re right?
1. You can go to prison for falling behind on your credit card bill
You can only go to prison for refusing to pay council tax, licences or magistrates fines. Prison is usually the last resort, and there are other enforcements that can take place before this such as attachment of earnings.
2. Creditors are able to send bailiffs to collect debts
Only courts have the authority to instruct bailiffs. If someone was at the door before the CCJ stage, it’s likely to be a debt collection agent. These people don’t have any powers at all.
3. A creditor can enforce the sale of a property to repay debts
The Creditor would need to apply for a Charging Order to secure the debt against a property. You would get the opportunity to put your case forward and it’s very rare for them to force a sale.
4. If your house is repossessed you will automatically be eligible for a council property
You may be eligible but it would depend on your situation. Repossession would not automatically qualify you.
5. If you miss payments on your credit debt you will be blacklisted
There is no such thing as a ‘blacklist’. If you default on your payments, this will be recorded on your credit file which lenders use to judge how risky or not you are to lend to.
6. If you miss debt repayments, your family’s credit score will be affected
It used to be the case that people with the same surname living at the same address were connected. Since October 2004, credit files have been attached to the individual only. The exception is if you are financially associated – for example through joint debts.
7. Creditors can phone at any time of night or day to collect debts
As per the debt collection guidelines from the Financial Conduct Authority, calling at unreasonable times or intervals is classed as harassment. There is also a new warning about debt collectors contacting you on social networking sites.
8. If you get a county court judgment you would have to attend a court hearing
County court paperwork is sent through the post. You could be asked to attend court if you wanted to defend or vary the amount but attendance is optional.
9. Your credit file is checked every time you apply for a new job
There are certain professions such as accountants, financial advisors and solicitors that may have to go through a credit check. However, the majority of these don’t.
10. My family will have to pay my debts when I die
Debts are usually written off, but the creditors can claim on the estate if there is one.
Are you struggling with debts, or can you remember the time before you sought help? What sorts of questions were running round in your head? Let us know so we can help dispel any more of those myths that might be out there.
We hope we’ve helped to put some minds at ease but if you’re in a debt situation and unsure about what to do next; please get in touch with us. We can explain your options clearly and work out a realistic solution for you.