Dealing with debt

Dealing with debt

Be it a mortgage, credit card, or a student loan, most of us carry debts of one kind or another. Let’s face it, bills are a fact of life. Occasionally, however, it may be impossible to pay your debts on time. If you find yourself in this situation, the key is not to bury you head in the sand. Instead, seek help and come up with a workable plan to pay off your debts.

Proportion of households in arrears: by age of household head, 2006/08 Great Britain
Proportion of households in arrears: by age of household head, 2006/08 Great Britain
Source:, 2006-2008

Get informed

ico4Frequently asked questions

  • Can I be sent to prison for failing to pay a debt?

    Yes, in some circumstances you can be sent to prison for failing to pay a debt. For example, if you fail to pay child maintenance or taxes despite having the means to do so, the relevant enforcement authority can apply for a ‘judgment summons’ requiring you to pay. If you fail to comply with the judgment summons, the court can send you to prison for up to six weeks – essentially on the ground that by failing to comply with the order you are in contempt of court.

  • What are my rights when dealing with bailiffs / debt collectors?

    Creditors employ bailiffs to collect debts owed to them. Generally, bailiffs may only do this with court permission. They cannot enter your property by force unless you invited them in on a previous visit to collect the same debt. Even if they have authority to enter your property, they cannot seize your basic household goods, clothing, bedding or trade tools. Debt collectors have even less power than bailiffs. They can only pursue debts by letter, phone, or legal action. They have no authority to visit you in person.

  • My creditors keep harassing me. What can I do?

    You should explain to your creditors that you are experiencing financial difficulties and tell them how you intend to resolve the situation. If, having done this, you still receive persistent calls from them or their collectors, this may count as harassment. Creditors should not put undue pressure on you to pay more than you can afford, sell any of your property or assets or take on additional debt to repay existing debts. If they do any of these things, you should contact your local council and Trading Standards office.

  • What is bankruptcy?

    If there is no prospect of repaying a debt over £750 within a reasonable period, either you or your creditor(s) can ask the court for a bankruptcy order. If the court grants the order, it will freeze your assets and appoint either a trustee in bankruptcy or an insolvency practitioner to take over your financial affairs. This person will have power to sell your assets – excluding basic household goods, clothing and trade tools – to pay your creditors. Bankruptcy is usually considered appropriate only for people with large debts above £5,000.

  • What is a debt relief order?

    Debt relief orders are relatively new and provide a simplified, quicker and cheaper alternative to bankruptcy. They are suitable for debtors who do not own property, have few or no assets, little disposable income and less than £15,000 of debt.

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