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Busting common debt myths: The facts

We often hear people avoid dealing with their debt problems because they're scared of something they’ve heard. Sadly, there are a lot of half-truths and lies shared about dealing with debt. It means people’s fears are often unfounded.

In this guide, we've busted the most common myths for you.

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If I miss payments on my debts, I’ll be blacklisted

The blacklist is a myth that’s been around for a long time. It suggests that once you miss payments on your debts, you’ll be banned from taking out credit in the future.

That’s not quite true. Lenders do refer to your credit history when deciding if they’ll lend money to you, but there’s no such thing as a blacklist.

Your credit file

When you apply for credit, lenders check your credit file to decide if they should approve your application.

  • All missed or reduced payments are recorded on your credit file
  • All payments you make towards your debt are recorded
  • There will also be a note added whenever you pay off a debt completely
With each payment you make towards your debts, your credit file is being repaired. What’s more, defaults will drop off your credit file after six years, putting you in a better position to apply for credit.

I could be sent to prison for my debts

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.

This hardly ever happens now, and it could only happen if you have certain types of unpaid debt.

In some very rare cases, a prison sentence could be enforced for non-payment of the following debts:

Prison is a last resort and it’s usually only considered if you have ignored or refused to pay the debt after other action has been taken and has failed.

There are no other debts you could go to prison for not paying. But it’s important that you get help with any debts you’re struggling with as soon as possible. This will help you to avoid other penalties, such as losing the service or court fines. 

Find out about priority debts and bills.

My water or energy supply will be cut off if I don’t pay

Your energy supplier could take the decision to disconnect you, but this is rare. There is other action they can take.

If you stop paying your bills:

  • Your supplier could try to collect the debt using a debt collection agency
  • Your supplier can get a court warrant to enter your home to fit a pre-payment meter. If you already have a smart meter they can switch you to pre-payment without a court warrant. Any arrears you have will be added to the meter and a set amount will be deducted each week
  • Your credit score will be affected if you miss payments

If you can’t afford to pay your bills, contact your supplier and explain the situation. They may be able to offer you a payment break or temporarily lower your repayments. They may also have hardship grants available to help you.

Your water supplier cannot turn off your water supply if you have arrears, but they can use court action to get you to repay the debt. If you’re on a low income you may be able to get help through your water supplier.

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

Buy now pay later allows you to spread payments over a longer period, instead of paying in one go.

That’s true for all BNPL plans but there are different fees, options and conditions for different plans.

This can make it easier for you to manage your money but there is the risk it could end up costing more if you don’t keep on top of repayments.

Many plans are interest free, but if you miss a payment you could end up being charged interest on your BNPL deal. Some plans can include admin or processing fees.

BNPL could impact your credit score, as some lenders will do a search and share your repayment data with credit reference agencies. If you struggle to manage your repayments, your ability to get credit in future could be affected.

It’s important to check how your BNPL payments work.

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

If you get married, you won’t be responsible for any debts or financial obligations your partner had beforehand.

You’re not liable for any debts or credit products they take out in their own name after you’re married.

Debts you could be liable for

Joint financial agreements

If you open a joint bank account or take out a loan or a mortgage, you’ll both be liable for these. This is called 'joint and several liability’.

Council tax

If you live in England or Wales, you'll normally be jointly responsible for any council tax owed on the property, even if only your partner or spouse is named on the bill.

Water rates

All adults in the property are responsible for the water bill during the period they lived there, even if they're not named on the bill.

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

When someone dies and leaves behind unsecured debts (debts that aren’t secured against a home or something else of value) in their name only, the unpaid balance will be settled with any money available in their estate. This is made up of items such as a house, savings and investments.

The personal representative of the person who died might be liable for their debts if they don't administer the estate properly.

Most unsecured creditors will only pursue debts unpaid when someone has died if they left behind a large estate, such as a house owned outright with lots of equity.

If the person had no assets at the time of their death, any debts they owed in their name only are written off.

If they leave behind a joint debt that needs to be paid, the surviving person will be liable for the full balance.

Worried about money?

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

Get help now

Debt consolidation is the best solution for paying off my debt

Debt consolidation is a way to pay off your debts that usually means taking out new credit in the form of a debt consolidation loan. It's more of a debt management strategy than a solution and it’s important to understand the risks involved.

  • It could be a more expensive option: If you have a poor credit score you might be paying more interest on your debts than your existing rate
  • 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 doesn’t tackle the root of the problem. If you’re prone to borrowing, taking out another loan might not be the best option. You'll need to make sure you stick to the repayments, keep a budget and avoid getting into more debt.

Some people mix up debt consolidation with debt management plan (DMP).  A DMP is a debt solution where you make one regular payment each month and this is distributed to your creditors.

You have to pay for debt advice

There are some debt advice companies that charge for advice. We don’t. These companies advertise ways to pay off your debts if you pay them a monthly fee.

But the truth is there are many debt advice organisations, such as us, who offer free debt advice. We always recommend you get free and confidential advice before going ahead with any debt solution. We don’t charge a fee for our DMPs and follow industry standards to avoid extra costs for other solutions where fees are built in.

Find out more about debt management companies.

If someone who lived at my address was in debt, it’ll affect me too

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 a creditor asks for your address, they do this to check you are who you say you are and how long you’ve lived at your current property.

The only way you can be linked to another person financially 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 on there that doesn’t seem right, you can query it with the agency.

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

Avoiding debt by moving to another country would make it harder for a UK-based creditor to find you, but it doesn’t mean they’ll stop chasing you. There are a growing number of organisations that will chase consumer debt outside of the UK.

Depending on where you move to, creditors may have a branch of their company in that country. They would be able to pursue the debt on the UK branch’s behalf.

Creditors can also take court action against you in your absence. This means that the debt will still need to be dealt with should you ever return to the UK.

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

Creditors can send bailiffs to my house to collect payments

Only the courts have authority to instruct bailiffs (also known as enforcement agents, or sheriff officers in Scotland) to visit your property.

Creditors may send collection agents, but they have no powers to force entry to your home and seize goods.

Bailiffs can only enter your property if you’ve allowed them in on a previous visit and you’ve signed a ‘controlled goods agreement’.

The only time a bailiff can force entry into your property is if they’re collecting unpaid magistrates fines or debts owed to HMRC. In these cases, the use of force to gain entry is an option, but it’s used very rarely.

If you’re dealing with any kind of court debt, you should get free and confidential debt advice as soon as possible.

Bailiffs can take anything they want from my house

There are strict rules about what bailiffs can and can’t 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 cooking appliance
  • A landline or mobile phone
  • Enough bedding for everyone in the house
  • A dining table and enough chairs for everyone in the house
  • Heating appliances
  • Lighting appliances
  • Medical or care equipment

Some goods are protected from being collected by bailiffs.

These are:

  • Goods that belong to someone else, but they can take goods that are jointly owned, the other person might need to produce 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’ve been treated unfairly, read our guide to making complaints about a bailiff.

My credit score will be affected if I get debt advice

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

"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're 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 put together a personal action plan, at any time of day. Alternatively, you can speak to one of our advisors over the telephone.