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Debt myths at Christmas: bills, calculator and festive decorations on a desk

12 Common Debt Myths Exposed: What You Really Need to Know

Updated for 2026

There are plenty of debt myths floating around that cause unnecessary panic, especially during expensive times like Christmas. Misinformation about bailiffs, credit ratings and even prison can leave you feeling confused and afraid to seek help. This guide cuts through the noise and gives you the facts, so you can deal with debt confidently and make the right decisions for your household.

Myth 1: Bailiffs Can Force Their Way Into Your Home

This is one of the most common debt myths, and it causes real fear. The truth is that bailiffs (officially called enforcement agents) cannot force entry into your home on a first visit. They must ask to be let in, and you are under no obligation to open the door.

You can speak to them through a closed door, a window or even a letterbox. If you do let them in, they may begin listing goods to cover the debt. Once you have granted entry, they can return and use reasonable force to re-enter on a future visit.

In limited situations, such as collecting unpaid criminal fines or tax debts for HMRC, bailiffs may apply to a court for a warrant allowing forced entry. But for council tax arrears and most consumer debts, they cannot break in or push past you. The GOV.UK guide on bailiff rights explains the rules clearly.

Read our full guide on bailiffs at Christmas for more detail.

Myth 2: Bailiffs Can Take Anything They Want

Another persistent myth. Enforcement agents can only seize goods belonging to the person who owes the debt. They cannot take items belonging to your partner, children or housemates, though you may need to prove ownership.

Certain items are exempt from seizure by law. These include:

  • Essential household items such as a cooker, fridge, washing machine, bedding and clothing
  • Items needed for your work or study, up to a combined value of £1,350
  • Goods on hire purchase or owned by someone else

If a bailiff tries to take exempt goods, you can make a formal complaint.

Myth 3: Debt Collectors Can Contact You as Often as They Like

Debt collectors and creditors are not allowed to harass you. Under the Consumer Rights Act 2015 and FCA debt collection guidelines, excessive contact counts as harassment. This includes constant phone calls, threatening letters sent daily, or contacting you at unreasonable hours.

If a debt collector is pestering you, report them to the Financial Conduct Authority (FCA). You can also request that they only contact you in writing, which gives you time to think and respond properly.

Myth 4: Your Family Inherits Your Debt When You Die

This myth causes a lot of worry, but the reality is more straightforward. When someone dies, their debts are paid from their estate (savings, property and other assets). If the estate does not cover the debts, the remaining balance is usually written off.

Your family members are not personally responsible for your debts unless they were a joint borrower or guarantor. A surviving spouse is not liable for the other partner’s sole debts.

The exception is joint debts. If you had a joint mortgage or joint credit card, the surviving account holder becomes responsible for the full amount. For more on managing debts after a bereavement, see the MoneyHelper guide on debts after death.

Myth 5: You Can Go to Prison for Any Debt

You cannot be sent to prison for failing to repay credit card debt, personal loans or most consumer debts. If you fall behind, the creditor may apply for a County Court Judgment (CCJ), which sets out a repayment plan. But prison is not on the table.

The exceptions are council tax, TV licence evasion, and some types of tax fraud. Even with council tax, imprisonment is a last resort used only where the court is satisfied you had the means to pay but refused. If you are genuinely struggling financially, the magistrates’ court will not send you to prison.

Our guide on whether you can go to prison for council tax arrears covers this in full.

Myth 6: A Bad Credit Score Affects Everyone in Your Household

Your credit score is personal to you. Living with someone who has poor credit does not damage your own rating. Additional cardholders on your credit card are not liable for any debt built up on the account either.

The only time another person’s finances can affect yours is through a financial association. This happens when you open a joint account or take out a joint mortgage. Once financially linked, lenders may consider both credit files when making decisions.

If you have an old financial association with someone you no longer share finances with, you can ask the credit reference agencies to remove it. Check our guide on how to clean up your credit score for step-by-step instructions.

Myth 7: Missing a Mortgage Payment Means Losing Your Home

Missing a single mortgage payment does not mean your lender will repossess your home. Under FCA rules (MCOB 13), lenders must treat repossession as a last resort and explore all alternatives first.

If you are struggling, contact your lender straight away. They may offer a temporary payment holiday, extend your mortgage term, or switch you to interest-only payments for a period. The earlier you get in touch, the more options you have.

Courts can also delay or suspend a possession order if you can show you will be able to resume payments. Free legal help is available through housing charities and your local council.

Myth 8: Creditors Will Never Negotiate

Many people avoid calling their creditors because they assume the answer will be no. In reality, most lenders would rather negotiate than chase a debt through the courts.

If your credit card repayments are piling up, letting the creditor know early could see them freeze interest, reduce it temporarily, or agree a lower monthly payment. Some may even accept a partial settlement if you can offer a lump sum.

You are in a stronger position than you think. Creditors want their money back, and a realistic payment plan is better for them than writing the debt off entirely.

Myth 9: Overdrafts Are Always Expensive

Since April 2020, FCA rules have required banks to charge a single annual interest rate on overdrafts, replacing the old daily fee structures. Most banks now charge between 35% and 40% APR on arranged overdrafts.

That is not cheap, but it is transparent. Some banks offer interest-free buffers of £250 to £500 for certain accounts. If you regularly dip into your overdraft, it is worth comparing accounts to find the best deal.

An arranged overdraft used occasionally and paid off quickly costs relatively little. The real danger is relying on it as a long-term borrowing solution, where the interest adds up fast.

Myth 10: All Debt Is Bad Debt

High-interest borrowing on store cards or payday loans is clearly damaging. But not all debt is harmful. A mortgage, a student loan, or even a sensible credit card used and repaid monthly can build your credit history and help you access better financial products in the future.

Having no credit history at all can actually make it harder to get approved for a mortgage or other borrowing. Lenders want to see that you can manage credit responsibly. The key is keeping balances low and making payments on time.

Myth 11: You Have to Pay for Debt Advice

You never need to pay for debt advice. Free, professional and impartial help is available from several organisations, including:

  • StepChange: the UK’s largest debt charity, offering online and phone advice
  • MoneyHelper: government-backed guidance on budgeting, debt and benefits
  • Citizens Advice: free legal and financial guidance on almost any issue
  • Council Tax Advisors: free information on council tax debt and your rights

Be wary of any company that charges upfront fees for debt management. Legitimate solutions like Debt Relief Orders, IVAs and Breathing Space are all available without paying a fee-charging firm.

Myth 12: Ignoring Debt Makes It Go Away

This might be the most dangerous myth of all. Ignoring debt does not make it disappear. Unpaid debts attract interest, fees, and eventually legal action. For council tax arrears, your local authority can apply for a liability order and instruct bailiffs within weeks of a missed payment.

The sooner you face the problem, the more options you have. Payment plans, hardship funds, council tax support and formal debt solutions are all easier to access before things escalate.

Read our guide on Christmas borrowing risks to understand how seasonal overspending can spiral quickly.

Get Free Help With Debt Today

If debt myths have been holding you back from getting help, take the first step today. Our team provides free, impartial information on council tax arrears, bailiff rights and debt solutions across England and Wales. You do not have to face this alone.

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