Debt Myths: Why It’s Dangerous to Believe These

An empty wallet

No matter how well you plan your financial future or save money, there will always be a situation or circumstance which will knock you off-center. It could be a medical emergency, a death in the family, or some other unforeseen situation. Borrowing money allows you to explore investments and as long as you can make the repayments on time.

However, some people find it hard to balance their financial responsibilities. Companies like say that these people need help in balancing their debts and responsibilities. Institutions like these often start by educating borrowers about what debt is. Here are common misconceptions about debt and creditors:

1. Debts go away if you ignore them.

Lending companies, banks, and most especially, loan sharks won’t ever let you forget what you owe them. You can try to ignore collection letters or calls, but the debt will still show up on your records and credit report.

When it is time for your credit score report, the unpaid debts will eventually come back to haunt you. Additionally, not paying your debts on time will earn you more debt in the form of surcharges, penalties, and added interest. It is best to make your repayments on time or have your debt restructured if you want an extended term.

2.  Collectors can’t sue you for any debt that is past the statute of limitations.

Some debt collectors don’t always follow the law and still sue individuals even after the statute has passed.  There are those who even re-age the debt or the loan and make it appear that it still falls within the prescribed amount of time. As a borrower, you keep a copy of your loan documents when you take out a loan from anywhere. Additionally, if you’ve been able to make initial payments, make sure you have a copy of payment receipts or records in case the case reaches the courts.

The best way to deal with debt is to settle it and not run away from it. There are ways to re-negotiate a loan or have its term extended if you can’t make the payments on time. Just talk to your lenders or get a debt consolidation company to help you.