When Debt is becoming unmanageable – Citizens Advice Bournemouth Christchurch & Poole

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Unmanageable debt – People deal with debt in different ways. Some people remain optimistic about their future financial situation; continue to buy luxuries before reducing debt.  Others take a less relaxed attitude to their debt, prioritising paying off their debts and going without unnecessary treats.

It doesn’t matter how much personal debt you find yourself in, if you’re not managing to cope with repayments, seek professional advice.


Towards the end of 2016, the average household debt excluding mortgages was around £12,000.

In the tax year 2015-2016, Citizens Advice Bournemouth helped with 2,687 debt issues. That means that on average we helped with more than 10 debt issues every working day.

Debt comes in many forms; credit cards, mortgages, payday loans, bill arrears such as council tax and water, to name a few.

Unsecured bank loans, overdrafts, credit cards and store cards are non-priority debts. This means that the lenders do not have extra powers to make you pay, for example; they cannot take your home and it is not a criminal offence to be unable to pay.

If your current account is with a bank that is connected to any of your debts, you may need to open a new account elsewhere to have your wages paid into, before negotiating with the bank about repaying your loan.

There are lots of ways to deal with debt; bankruptcy is not the only option!


Going bankrupt will usually cost £680. Therefore, you need to make sure you can afford to go bankrupt if considering this as an option.

Bankruptcy may help you become debt-free, but it isn’t the right option for everyone. It’s important you understand how it will affect your day-to-day life and make sure you’ve explored the alternatives first.

There isn’t a minimum amount of debt you need to have to be eligible for going bankrupt. If the value of your unsecured debts is higher than the value of the things of value that you own, then bankruptcy may be worth considering.

Bankruptcy may be suitable for you if all of the following apply:

  • you can’t see a way to pay your debts
  • you don’t have many belongings of value and there’s little or no equity in your home
  • it’s unlikely that your situation will improve
  • you live or carry out a business in England or Wales, or have done so at any point in the last three years and live permanently in another European state (apart from Denmark).

Bankruptcy may not be suitable for you if any of the following apply:

  • you owe less than £20,000 and any belongings you own (other than basic household goods and a vehicle worth less than £1,000) are not worth more than £1,000 in total
  • you work in certain occupations such as a solicitor, accountant or estate agent, as your professional association may bar bankrupt people from membership
  • your circumstances might change in the near future – for example, if you’re going to come into some money through an inheritance or payment protection insurance (PPI) reclaim, it might be a better option to use this to help deal with your debt problem.
  • you don’t want your debt problems to become public knowledge


Bankruptcy will show on your credit reference file for six years from when you become bankrupt. It will have a serious impact on your credit rating. This could make running a business, getting a mortgage or getting other credit very difficult for a long time. This is because it would show you’ve struggled to keep up repayments. Therefore, you might also struggle to open a new bank account after you’re declared bankrupt.


If you own your home, it may be sold, with the proceeds used towards paying your creditors.

If you rent your home, you’re unlikely to lose it unless your tenancy agreement says that you can’t rent the home if you’re bankrupt. You may find it harder to find a new home to rent.

While you’re bankrupt, you’re not allowed to get credit for £500 or more, without telling the creditor about your bankruptcy; doing this would be committing a criminal offence where you could be fined or even sent to prison. If a bankruptcy restrictions order (BRO) is made against you, this rule will also apply as long as the BRO is in force.

If you’re unhappy with how bankruptcy might affect your credit rating, you might want to consider a different debt solution.


The main alternatives to bankruptcy are:

  • Debt Relief Order: this may be appropriate if your debts total less than £20,000, you have less than £50 a month available to pay your creditors, and any belongings you own (apart from basic household goods and a vehicle worth less than £1,000) are not worth more than £1,000 in total
  • Individual Voluntary Arrangement (IVA): this may be appropriate if you’ve got at least £100 you could put towards paying your debts each month and want to pay off your debts over a fixed period of time
  • Administration Order: this may be appropriate if the total of your unsecured debts is less than £5,000 and you’ve got a county court judgment for debt.

If you owe any belongings, apart from basic household goods and things you need for work, they may be sold, with the proceeds used towards paying your creditors.

Contact Us

Don’t be alone when it comes to managing your debt; Citizens Advice Bournemouth can provide free assistance, just drop-in at the Town Hall. Additionally, arrange to speak to one of our specialist debt advisers or ring the Dorset AdviceLine on 03444 111 444.

We’re here to provide free, independent and impartial advice. We’ll guide you through the process of what to repay first, how to handle your creditors and what, if any, debt solutions may be suitable.  We’ll also look at your other expenses to see where help can be given. For example, in lowering the cost of household bills.

If you’re unsure what to put in your letters to your creditors or don’t have the ability to contact creditors yourself, inform us.

To read more about ‘debt and money’, visit www.citizensadvice.org.uk/debt-and-money/.