StepChange #debtmyths

StepChange_James

The myth: Basic bank accounts don’t let you have a debit card #debtmyths

The reality:
As part of giving debt advice, we regularly advise our clients to change to a basic bank account with a bank they don’t owe any money to. This is to avoid their income being taken by the banks. You can read more about this in our blogpost about what to do if the bank takes your money.
One of the common objections we hear from clients we give this advice to is that they need to have a debit card so they can make purchase online and in shops. It’s fair to say that having a debit card can help to save money if you’re using them to get the best online deals, so it’s a valid concern.

However the reality is that the majority of basic accounts WILL let you have a debit card. There are a few that will just give you a cash card but most let you have a Maestro card or a VISA debit card, either are accepted in most shops and websites.

You can see what kind of cards are available by click this link to download a list of basic bank accounts and their features: https://www.moneyadviceservice.org.uk/files/bank_accounts_table.pdf (clicking this link will start a download of the list). Or you can read about Martin’s recommended basic bank accounts.

Former_StepChange_Rachel

Thursday

The myth: Bankruptcy will write off all of your debts

The reality:

There are loads of misunderstandings about bankruptcy. One of my personal favourites came in an episode of the American version of The Office when Steve Carrell’s character believes all you need to do is shout “I declare bankruptcy” as loud as you can.

A more commonly held belief is that bankruptcy is a way to get all of your debts written off. While most debts will be included in bankruptcy there are some significant exceptions and it’s important to know them before deciding if bankruptcy is for you.

One exclusion we’ve already covered in previous debt myths are student loans but there are others too. Criminal fines and child support debts also don’t go into the pot.

Secured debts like mortgages are also not included if you still own the property (though you may have to sell the property if the court thinks there is equity in it).

Dunx69

rateable value water bills are also only included to the date of bankruptcy. so if you get a £500 rv bill on 1st April and go bankrupt on 1st October only half the £500 would be written off.

probs same for council tax

fatbelly

Dunx69 wrote: »

probs same for council tax

Once you lose the right to pay Council Tax in instalments, the whole bill can go into DRO/bankruptcy.

With water, I think it's a contractual thing that allows them to bill you for the whole 12 months in April but apportion the arrears if you go insolvent mid-year. Probably most authorities do have that clause but SWW only added it a few years back so I'm not 100% sure that all authorities do.

Martinslovechild

StepChange_Rachel wrote: »

There are loads of misunderstandings about bankruptcy. One of my personal favourites came in an episode of the American version of The Office when Steve Carrell’s character believes all you need to do is shout “I declare bankruptcy” as loud as you can.

It's worth pointing out that bankruptcy laws in America are different than those in the U.K.

Quarry

StepChange_Mat wrote: »

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

Please could you publish your policies somewhere on debtfreewanabee? Are you the only charity using this website?
Thanks. Q.:)

StepChange_James

Quarry wrote: »

Please could you publish your policies somewhere on debtfreewanabee? Are you the only charity using this website?
Thanks. Q.:)

Hi Quarry,

We don’t have a policy or set criteria to publish about when we offer DMPs. Every situation is different, so we recommend DMPs to people when we think they’re the best option for their particular circumstances.

If a DMP isn’t the best route then we’ll always advise on the alternatives and support people whatever debt solution suits them.

We’re not the only organisation that posts in a professional capacity on here. You can tell those with a similar status, as they’ve got “Has MSE’s permission to post for company” under their username.

Kind regards

James

StepChange_James

The myth: Every visitor to @MoneySavingExp is looking for discount vouchers

The reality:
Firstly, we’d like to wish a huge happy 10th birthday to MSE today. To celebrate we’ve put together a blogpost covering the top ten places to save money on MSE.

It’s hard to even imagine MoneySavingExpert.com not being around, it’s become a part of so many of our lives!

We’ve done a few “back of a fag packet” calculations and discovered that we’ve given debt help to over 25,000 people who’ve got our details from MSE. So while MSE encourages people to be savvy with their cash, there are significant numbers of people who also need free debt advice.

Former_MSE_Andrea

Very good! Thank you

Former_StepChange_Rachel

The myth: You can’t get a new bank account if you’ve got problem debts

The reality:

When people contact us for debt help one of the most frequent things we advise our clients is to change their bank accounts. This is to avoid the bank taking money from your account to repay their debts (we’ve a blogpost on what to do when the bank takes your money, in case it’s too late!).

It’s surprising how many people don’t think this is possible if you’ve a less than perfect credit score. The reality is that everyone should be able to get hold of a basic bank account. You might not qualify for an overdraft but they’re best avoided in a lot of cases anyway.

The important thing is to be very clear with any bank you apply to. The staff in banks are often trained to encourage people to take out the bank accounts with all the bells and whistles, so you need to make it very clear that you just want a simple basic account. Going onto the banks website and finding out their basic accounts brand name can help you to make sure there is no confusion.