Can I Go To Jail for Unpaid Debts? (And Other Myths About Debt)
This is a question I get a lot, and honestly, sometimes I even ask this question to myself for missing my payments. And I know it’s worrisome. So here are some questions that spark myths about debts:
Can I Go To Prison For Not Paying My Debts?
Of course, from the title itself, the answer is: No. If you’re unable to repay your debts, you’ll not be jailed. First of all, it’s not a criminal offence. The only way you’ll get jailed for not paying something are either: refusing to pay council tax or criminal fines. Even though it may be punishable by imprisonment, jail time is only the last resort for those offences.
Will My Name Appear In The Newspaper If I Declare For Bankruptcy?
Back then, local newspapers would have a section where they would put the names of those who would declare for bankruptcies and insolvencies to inform creditors, but now in our digital age, you’d rarely find newspapers publishing articles about your or other people’s bankruptcy.
If it’s of national interest or has a high impact to the economy, sure they’d published an article for this.
Instead, if ever you’d be declaring for bankruptcy, this will be posted on the London Gazette and you’ll be listed on the Government’s Insolvency Service website.
Will I Be Blacklisted If I Miss My Payment?
First of all, there’s no such thing as a “blacklist”, but if you miss your payments then declared for default, this may affect your credit score, and would impact your applications for loans or new accounts.
Can Creditor Send Bailiffs To Collect Debts?
You can read more on how to handle a visit from the bailiff on our article: What To Do When A Bailiff Knocks On Your Door?
Bailiffs are people who were vested by the court on behalf of the creditors, and have legal rights and powers to collect debts. While the debt collectors are people who were hired by private firms that help them collect debts.
So, only the court can send a bailiff to collect debts. It’s not also done in a jiffy. A bailiff must send a Notice of Engagement first, and must wait 7 clear days before visiting your home.
Can A Bailiff Forcibly Enter My Home And Take Whatever They Want To?
There are only a few reasons for a bailiff to forcibly enter your home. This could be criminal fines (traffic and parking offence are not criminal fines) from a magistrate court, or tax debts to HMRC (Her Majesty’s Revenue and Customs).
Upon forcibly entering your home, they would need to provide a proof of your debt, a warrant or writ from a court. In addition, bailiffs are not allowed to take these items:
- children’s toys
- items you bought through hire purchase
- things that are in your house but doesn’t belong to you
- items and appliances that are essential to your daily living or work
Could They Take My Home If I Go Bankrupt?
If you have a majority ownership on your home, the official receiver may have to sell it to pay the bankruptcy debts but, if you have a small or no stake in your home, you could still stay at your home if the mortgage is affordable than the costs of local rentals.
Would My Debts Be Wiped Off If Haven’t Made A Payment For Six Years?
With the Limitation Act of 1980, it provides that breaches of an ordinary contract are actionable for six years after the event.
This doesn’t endorse avoidance for payments or debts, but to protect people from forcibly paying a debt that have timed out.
The debt is not written off and still legally exists, but with the Act in force, the lender can no longer enforce the debt through the courts.
Would I Still Be Paying For Something If I Declare For Bankruptcy?
Bankruptcy has costs to it. Once you’ve paid your initial payment, the OR (official receiver) will evaluate your income and expenditure. They then would decide if you need to pay an Income Payment Order or Arrangement (IPA or IPO).
This is usual if you have more than £20 surplus income. Bankrupts are normally expected to pay any surplus income into the arrangement for three years depending on their circumstances.
How about you? What are your other myths when it comes to debt? Share your thoughts in our comment section.
