Financial difficulties often leave many of us feeling overwhelmed and hesitant to seek help due to lots of confusing information. But dealing with debt doesn’t have to be scary. Getting the right support can ease your money concerns and stress, helping you find a debt solution that fits your situation. Experts at leading debt management business MoneyPlus clear up some common debt myths so you have the right information to guide you.
Common Debt Myths: Busted!
1. Myth: You need a good credit score to take out credit.
Reality: While a good credit score can enhance your borrowing options, having a poor credit score doesn’t mean you can’t borrow any money. Different lenders have varying criteria, and some may accept borrowers with lower credit scores.
2. Myth: Your bad credit rating affects the people you live with.
Reality: A credit rating is individual, and it won’t impact those you live with unless you’re financially linked, like having a joint mortgage.
3. Myth: Your family needs to pay your debts off when you die.
Reality: Your family is not obligated to pay your debts after your death. Creditors may seek payment from your estate, but family members are only liable for joint debts.
4. Myth: The less you borrow, the more appealing you are to lenders.
Reality: While logical, not borrowing at all doesn’t demonstrate your ability to manage credit. Lenders want to see a positive credit history, showcasing responsible borrowing and repayments.
5. Myth: You will face prison if debts are not paid.
Reality: Imprisonment for debt is extremely rare and typically limited to specific cases like council tax, criminal fines, child maintenance arrears, or business rates.
6. Myth: You will lose your home if you go bankrupt.
Reality: Bankruptcy may put your assets at risk, but various factors, such as equity and mortgage payment status, influence whether your home is sold. Contact your bank, mortgage adviser or charity like Citizens Advice Bureau for further advice.
7. Myth: Bailiffs can force entry into your home.
Reality: While bailiffs collecting certain debts may force entry, it is rare. If you’ve signed a ‘controlled goods agreement,’ they may enter.
8. Myth: Missing payments can result in you being blacklisted.
Reality: There’s no such thing as a blacklist. While missed payments affect your credit history, it doesn’t permanently bar you from obtaining credit.
Dealing with debt may feel incredibly daunting but remember that you’re not alone. Dispelling common myths and simplifying the confusing language of finance is a great place to start. Take one step at a time – whether it’s understanding your budget or organising your bills. Know your rights when it comes to debt management and don’t be afraid to seek assistance.
