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Busting common debt myths: The facts

Many people tell us they put off dealing with their debts out of fear. These fears are often based on false information.

There are a lot of myths about debt and money. Make sure you know what is right and what is wrong. In this guide, we have busted the most common myths for you.

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"I could be sent to prison for my debts"

This is only true for a few types of debt. And it is very rare.

Lots of people worry that they could be sent for prison for not paying their debts. While that was true in the past, times have changed.

In some rare cases, you could be sent to prison for non-payment of these types of debt:

Prison is a last resort and is only considered if:

  • You have ignored the debt
  • You refused to pay the debt after other action has been taken and has failed

You cannot go to prison for not paying other types of debt. But you should get help with any debts you are struggling with. This will help you to avoid other penalties, such as:

  • Losing the service
  • Court fines

Find out about priority debts and bills.

"My water or energy supply will be cut off if I do not pay"

This can happen. But it is rare.

There are many other actions they can take before cutting off your supply.

If you stop paying your bills, energy suppliers can:

  • Try to collect the debt using a debt collection agency
  • Get a court warrant to enter your home to fit a pre-payment meter
    • If you have a smart meter they can switch you to pre-payment without a court warrant
    • Any missed payments you have will be added to the meter. A set amount will be taken off each week

Your credit score will be affected if you miss payments.

If you cannot afford to pay your bills, contact your supplier and explain the situation. They may be able to offer:

  • A payment break
  • Temporary lower payments
  • Hardship grants

Your water supplier cannot turn off your water supply if you have arrears. But, they can use court action to get you to pay the debt.

If you are on a low income you may be able to get help through your water supplier.

"When I die, my family will have to pay off any debts I have"

This is not true.

If you die and:

  • You have debts that are not secured against your home or an item of value
  • The debt is in your name only

The unpaid amount will be settled with any money left in your estate. These are items such as:

  • A house
  • Savings
  • Investments

A personal representative is someone who manages your estate when you die. They might be liable for your debts if they do not manage this right.

The people you owe may chase unpaid debts after you die. But only if you leave behind a large estate. Such as a house that you own with lots of equity.

If you have no assets at the time of your death, any debts in your name are written off.

If you leave behind a joint debt, the other person will be liable for the full balance.

"Lenders can send bailiffs to my house to collect payments"

This is not true.

Only the courts can send bailiffs to visit your home. Bailiffs are also known as:

The people you owe may send collection agents. But they have no powers to force entry to your home and take goods.

Bailiffs can only enter your home if:

  • You have let them in on a previous visit, and
  • You have signed a ‘controlled goods agreement’

The only time a bailiff can force entry into your home is if they are collecting:

In these cases, the use of force to gain entry is an option, but it is rarely used.

If you are dealing with any kind of court debt, you should get free debt advice.

"Bailiffs can take anything they want from my house"

This is not true.

There are strict rules about what bailiffs can and cannot take from your home. They prefer goods that sell for a good price at public auction, so their main targets will be:

  • Vehicles
  • Electronic goods, like TVs and computers
  • Jewellery
  • Furniture

They must leave you with basic items, including:

  • A washing machine, fridge and something to cook with
  • A landline or mobile phone
  • Bedding
  • A dining table and enough chairs for everyone in the house
  • Heating and lighting appliances
  • Medical or care equipment

Some goods are protected from bailiffs.

These are:

  • Goods that belong to someone else. They can take goods that are jointly owned. The other person might need to show a receipt to prove ownership
  • Pets and assistance dogs
  • Tools and equipment that you need for your job or study, up to a value of £1,350
  • Fixtures in your property. Such as fitted wardrobes or fitted kitchen units

If you think you have been treated unfairly, read our guide to making complaints about a bailiff.

Worried about money?

Use our online tool to get free debt advice tailored to your situation.

Get help now

"If I miss payments, I will be put on a credit blacklist"

This is not true.

Lenders will look at your credit file. Your history will help them decide whether to lend to you. Each lender chooses who they will lend to. That is why there is no such thing as a blacklist.

About your credit file

When you apply for credit, lenders check your credit file. It will show:

  • All missed or reduced payments
  • All payments you make towards your debt
  • A note whenever you pay off a debt

With each payment you make, your credit file is being repaired.

"If I get married, I will take on my partner’s debt"

This is not true.

If you get married, you will not be responsible for your partner's:

  • Debts
  • Financial obligations

Debts you could be liable for:

Joint financial agreements

If you:

  • Open a joint bank account
  • Take out a loan together
  • Get a mortgage together

You will both be liable for these. This is called 'joint and several liability’.

Council tax

If you live in:

  • England
  • Wales

In most cases, you will both be responsible for any council tax owed.

It works this way even if only one of you is named on the bill.

Water rates

All adults in your home are responsible for the water bill during the period they lived there.

It works this way even if they are not named on the bill.

"My credit score will be affected if I get debt advice"

Debt advice will not affect your credit score, but some some debt solutions will.

While some debt solutions may impact your credit score, dealing with your debts should be your priority. Missed payments could have already affected your credit report.

"If someone who lived at my address was in debt, it will affect me too"

This is not true.

This used to be a concern for many people. But credit files and CCJs (County Court Judgments) are based on the individual, not the address.

When someone you owe asks for your address, they do this to check:

  • That you are who you say you are
  • How long you have lived there

The only way you can be linked to another person's debt is if you take out joint debt with them.

You can always check your credit file with the three credit reference agencies. If you do see anything that does not seem right, you can ask them about it.

"If I leave the UK, my debts will go away"

This is not true.

Moving to another country would make it harder for a UK-based lender to find you. But it does not mean they will stop chasing you.

There are a growing number of organisations that will pursue a debt outside of the UK.

Lenders may have a branch of their company in other countries. They would be able to pursue the debt on the UK branch’s behalf.

They can still take court action against you. This means that the debt will still need to be dealt with if you ever return to the UK.

There are steps you can take to deal with your debts from abroad.

"You have to pay for debt advice"

This is not always true.

There are some debt advice companies that charge for advice. We do not, and there are many other organisations who offer free debt advice.

We recommend getting free and confidential advice before choosing any debt solution.

  • We do not charge a fee for our DMPs
  • We follow industry standards to avoid extra costs for solutions where fees are built in

Find out more about debt management companies.

"All Buy Now Pay Later (BNPL) plans are the same"

This is not true.

All BNPL plans allow you to spread the cost of payments.

But, plans will have different:

  • Fees
  • Options
  • Conditions

This can make it easier for you to manage your money. But, there is the risk it could end up costing more if you do not keep on top of payments.

Many plans are interest free. But if you miss a payment you could end up being charged interest. Some plans can include:

  • Admin fees
  • Processing fees

BNPL could impact your credit score:

  • Some lenders will do a 'hard' or 'soft' search when you apply for credit
  • They may share your repayment data with credit reference agencies
  • If you miss payments, you could struggle to get credit in the future

It is important to check how your BNPL payments work.

"Debt consolidation is the best way to pay off my debt"

This depends on your situation.

Debt consolidation is a way to pay off your debts. But it means taking out new credit in the form of a loan.

It is more of a debt management strategy than a solution and you should know the risks involved.

  • It could cost you more
  • If you have a poor credit score you might have to pay more in interest
  • It might not help you clear your debts
  • Even if you have a good credit score your interest rate could be lower but your debt amount remains the same

Debt consolidation does not tackle the root of the problem. If you borrow often, taking out another loan might not be the best option. You will need to make sure you:

  • Stick to the payments
  • Keep a budget
  • Avoid getting into more debt

Some people mix up debt consolidation with debt management plan (DMP). On a DMP, you make one payment each month and this is split up and sent to the people you owe.

"I can’t speak more highly of the help I received and I want to pass it on to others."

Can you help me with my debts?

If you are worried about debts, please get in touch with us. We can give you free and confidential debt advice.

Our online advice tool can help you make a personal action plan, at any time of day. Or, you can speak to one of our advisors over the telephone.