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  • FIRST POST
    • Former MSE Wendy
    • By Former MSE Wendy 13th Nov 12, 7:12 PM
    • 868Posts
    • 1,782Thanks
    Former MSE Wendy
    StepChange #debtmyths
    • #1
    • 13th Nov 12, 7:12 PM
    StepChange #debtmyths 13th Nov 12 at 7:12 PM
    Welcome to the new DebtMyths thread by StepChange Debt Charity (formerly Consumer Credit Counselling Service). We'll leave them to explain the idea but do let us know what you think...


    Hi everyone,

    Sometimes it can be very hard to get the truth about debt. At StepChange Debt Charity (formerly CCCS) we hear so many stories that clients have overheard down the pub, on the bus, or found on the web that are, to be frank, rubbish!

    So we’ve been asked by MoneySavingExpert.com to help guide you through some of the myths that surround money and being in debt.

    Each weekday afternoon we’ll tweet a common debt myth on the MoneyAware Twitter channel (which by magic will also appear on the MSE Debt Problems page) and then debunk it on this forum thread. You’re very welcome to add your own thoughts, myths you’ve heard, or ask us questions.

    If you’d like to retweet us we’re using the hashtag #debtmyths on Twitter.


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    Last edited by Former MSE Debs; 21-01-2014 at 4:11 PM.
Page 2
  • StepChange_Rachel
    The myth:

    Your student loan will be written off if you go bankrupt #debtmyths

    The reality:

    No matter what kind of student loan you have, you can’t get the Student Loan Company to write it off through insolvency. This means whether you go for an IVA, DRO or bankruptcy, your student loan won’t be written off. There are instances where they’re wiped but not through insolvency. There’s more information on this over on the main site.

    If you’re a student and would like a bit of help with managing your finances then you might want to check out our student debt guide, stuffed with useful information about dealing with your finances.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    The myth:

    There’s nothing you can do to stop payday loan companies taking payments #debtmyths

    The reality:

    When you sign up for a payday loan there is usually something in the small print that means you’ve agreed to something called a “continuous payment authority”. This means that you’ve given them permission to take payments from your debit card at a future date.

    These kinds of payments are trickier to cancel than Direct Debits but not impossible.

    Do you need to avoid payday loan payments swallowing up you bank balances? We’ve got a handy blogpost that talks through how to cancel a continuous payment authority, something we advise on every day.

    If you’ve got a payday loan and are going to struggle to make the payment then you should get debt advice as soon as possible.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

    • Time to face the music
    • By Time to face the music 5th Dec 12, 10:14 PM
    • 5,378 Posts
    • 38,109 Thanks
    Time to face the music
    Why do posts keep vanishing from this thread?
    LBM 10/1/12 ~ DFW Start 6/2/12: £82,344 ~ Now Zero
    Debt free 17th April 2015
    Eternal thanks to the DMP & Mutual Support (no.439) and Payment a Day Threads
    Mortgage free 3rd July 2014 - Grateful thanks to the 2013/14 MFW threads
    "Debt is normal. Be weird!" Dave Ramsey
    Proud to have dealt with our debt
  • archived user
    The myth:

    You’ve broken the law if you fall behind on debt repayments #debtmyths

    The reality:

    It may be surprising to some but “Can I go to jail if I don’t pay my debts?” is one of the most common questions we receive from our clients. Missing payments on credit debts is a civil matter, so it’s not against the law.

    Anyone familiar with the works of Charles Dickens will have heard about debtor’s prison, where you get flung into if you’ve got behind on your bills back in the old days. Thankfully the Debtors Act of 1869 abolished debtors prison, so missing a credit card payment won’t mean you end up doing a stretch in Strangeways!
    • fermi
    • By fermi 6th Dec 12, 4:05 PM
    • 38,958 Posts
    • 46,750 Thanks
    fermi
    The myth:

    There’s nothing you can do to stop payday loan companies taking payments #debtmyths
    Originally posted by StepChange_James
    Another very useful link: http://www.paullewismoney.blogspot.co.uk/2012/04/the-continuous-payments-racket.html
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com | > New to Forum? Click for Guide <

    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • StepChange_James
    The myth:

    A debt management plan usually takes 10 years or more to pay off #debtmyths

    The reality:

    Many people approaching us for advice on debt management worry that a debt management plan (DMP) will take forever to clear their debts. We’ve gone back over the stats for our clients who’ve completed their DMPs and found that the average plan took five years, two weeks and five days to pay off (about the same as an IVA).

    We’ve got an interesting blogpost if you’re curious about the difference between an IVA and a DMP.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

    • StepChange Private Messages
    • By StepChange Private Messages 10th Dec 12, 3:44 PM
    • 95 Posts
    • 107 Thanks
    StepChange Private Messages
    The myth:

    If you miss payments on your credit debt you‘ll be blacklisted #debtmyths

    The reality:

    Please don’t worry. There’s no such thing as a ‘blacklist’. It’s nothing more than an urban legend. If you miss or reduce a payment a note will be made on your credit file. Lenders must look at your credit file before they let you borrow from them but a less-than-stellar credit rating shouldn’t exclude you from every form of lending.

    If you’re getting turned down for credit it could be a sign that you need debt help. We can help you put together an income and expenditure budget and work out how best to get on top of your finances.
  • archived user
    The myth:

    Creditors and debt collectors can call you at any time #debtmyths

    The reality:

    We often hear about creditors and debt collectors phoning late at night or early in the morning but, as the Office of Fair Trading (OFT) lays out in its debt collection guidelines, calling at unreasonable times or intervals is classed as harassment. This can include parts of the day if you work night shifts.

    The OFT also warn debt collectors not to contact those in debt via social networking sites (read our 10 ways to stop debt collectors finding you on social media).
  • StepChange_James
    The myth:

    If you go bankrupt you will always lose your house #debtmyths

    The reality:

    Because bankruptcy is so complicated there’s unfortunately no blanket answer to this. It’s so important that you stay away from companies that offer to manage your bankruptcy for a fee. Instead, you should get free and independent debt advice.

    If you have plenty of equity in your home, and it’s the only way to release your money in the property, the official receiver or trustee may have to sell it to help pay the bankruptcy debts. There are exceptions to this and you can read more in this government leaflet.

    However if there’s little or no equity in your home you may be able to stay put if you can keep on top of the mortgage payments each month. Your official receiver may compare what you’re currently paying to local rent prices to ensure your mortgage payment is in line with them.

    The official receiver or trustee still has 2 years and 3 months from the time of your bankruptcy to realise the asset if the value of the property increases.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    The myth:

    If you get a county court judgment (CCJ), you’ll have to go to court #debtmyths

    The reality:

    All paperwork relating to county court judgments (CCJ) is sent through the post. You’d only have to attend court if you wanted to defend or vary the amount, but you certainly don’t have to do this.

    Some may fancy their day in court, dressing up in a fancy suit and trying to win over judge with poetic defences and pithy asides. But they’ll be sorely disappointed; if they get a CCJ they’ll just need to post off a form they’ve filled in.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    The myth:

    If you guarantee a loan for someone you’ll never be asked to make any payments. #debtmyths

    The reality:

    We understand why you may want to help your friend, but you should know what you’re signing up for first. When you agree to become a guarantor you’re responsible for the full debt if the person that borrowed the money can’t keep up with the payments.

    Not being able to pay is usually down to events outside a person’s control, but could potentially leave you, the guarantor, in need of debt help. Think as well of the rift that could cause between you and the person you tried to help. Chances are you won’t be too impressed with them!

    For this reason we recommend that you never act as a guarantor unless you’re able to afford the repayments.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    The myth:

    There are lots of free debt management companies #debtmyths

    The reality:

    UK-based fee-charging debt management companies that promote their services as “free” are breaking strict advertising rules introduced on 1st September 2010.

    This came after some organisations had been guilty of misleading the public, claiming to offer “free” help and advice in their advertising even though a typical plan from a fee-charging debt management company could cost around £5,000.

    You should never pay for debt help. We provide free, impartial debt help and advice with no hidden charges.

    Other organisations offering genuinely free debt advice include:
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • mats84
    As CCCS have taken the time to answer Depth Charge, why won't they answer another straightforward question? It isn't a particularly hard question to answer, i.e. as a charity why do you turn people away?

    Would be nice to have public clarification, even if only for newbies to the boards on here.
    Originally posted by GD2
    I have had a lot of support from StepChange so I will admit I'm biaised but I think people have got this a little wrong. StepChange exists to provide debt advice and help people with problems to find the right solution for them. If as it has been for me a DMP is the right solution then all well and good but for many people other solutions will be more appropriate. StepChange don't turn anyome away, but if a DMP is not the best option for someone's circumstances then it's only right not to put them on one surely?
  • GD2
    You are so wrong I'm afraid. If a DMP is a good solution, but your affordability is limited, say less than £100 per month, then CCCS will not help and will pass the burden (don't like using that word but it is the best I can think of) either back to the debtor and advise self help or point to somewhere like CAB.

    If self help or CAB is the right way to go when you can afford £50 per month, then why is their offer of help a better route when you can afford, say, £400 per month? Make your own mind up as to the answer to that particular countdown conundrum.

    So, yes, they DO turn people away when their assistance could be argued to be most needed. I notice though, that whilst you took the time to make your point, and good on you for doing so, CCCS pointedly ignored a very reasonable question.

    There are lots of others, but one at a time will do.
  • archived user
    The myth: All of your creditors need to agree to your IVA proposal for it to go ahead #debtmyths

    The reality:

    All of your creditors will be sent a copy of your IVA proposal and will be given a day and time to vote at your creditor meeting.

    Not all of your creditors need to accept the IVA terms for your IVA to be approved. The proposal needs to be accepted by 75% of creditors in value who vote at the meeting.

    Even if some creditors vote to reject your IVA they can be outvoted by creditors who hold a higher proportion of your debt. Once approved the vote is legally binding for all your creditors, even those who voted to reject it, or didn’t vote at all.
  • archived user
    You are so wrong I'm afraid. If a DMP is a good solution, but your affordability is limited, say less than £100 per month, then CCCS will not help and will pass the burden (don't like using that word but it is the best I can think of) either back to the debtor and advise self help or point to somewhere like CAB.

    If self help or CAB is the right way to go when you can afford £50 per month, then why is their offer of help a better route when you can afford, say, £400 per month? Make your own mind up as to the answer to that particular countdown conundrum.

    So, yes, they DO turn people away when their assistance could be argued to be most needed. I notice though, that whilst you took the time to make your point, and good on you for doing so, CCCS pointedly ignored a very reasonable question.

    There are lots of others, but one at a time will do.
    Originally posted by GD2
    Hi GD2

    We only recommend a debt management plan when it’s best advice for the clients own situation. We don’t have any set criteria for affordability and we have no £100 threshold for DMPs.

    It’s probably worth emailing us directly if you have any questions about our policies.

    Kind regards,

    Mat
    • fermi
    • By fermi 19th Dec 12, 9:24 AM
    • 38,958 Posts
    • 46,750 Thanks
    fermi
    Please keep this thread on topic for discussion of the #debtmyths posts

    As requested earlier, if you have other comments/questions then you can post on the main forum/thread, contact via emails etc.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com | > New to Forum? Click for Guide <

    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
    • dancingfairy
    • By dancingfairy 19th Dec 12, 9:47 AM
    • 8,888 Posts
    • 7,284 Thanks
    dancingfairy
    Maybe this thread could be kept to the myths by Stepchange and the questions be answered (and linked to) and answered in another thread as the questions should be answered.
    df
    Making my money go further with MSE
    How much can I save in 2012 challenge
    75/1200
  • StepChange_Rachel
    The myth:

    Your bank can’t take money from your account without permission #debtmyths

    The reality:

    This catches out a lot of our clients. If you’ve got debts with the bank that your income is paid to, they can take money to pay towards your debts without warning.

    For example if you have a current account and a loan with the same bank and are behind on payments, the bank can take money that’s in your account to pay the loan. Remember that a lot of banks are connected nowadays (Lloyds TSB with the likes of Halifax and Bank of Scotland, for example).

    This is called the right of offset (point 4) and if you’re worried about the bank taking your money we recommend that you open a basic bank account with a completely impartial bank.
    Last edited by StepChange_Rachel; 19-12-2012 at 3:55 PM.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • Lensman
    This is a thread entitled StepChange #debtmyths. From the start it has had a narrow scope.

    Posts about the general policies of StepChange should not be posted here - the scope is Debt Myths. Off topic posts may have merit and value, but they dilute the meaning of the thread for posters looking for advice on the subject matter.

    Off topic posts should therefore be moderated IMO.
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