Common Questions About Debt

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The old saying is quite accurate: “Only two things in life are certain: death and taxes.” The number one question many people have when it comes to amassing debt is simply how they can rid themselves of it. While there are helpful debthelp.com articles on nearly every aspect of debt management, some people are just looking for the magic bullet for debt elimination, and this article should point you in the right direction.

First things first, we need to figure out exactly what we mean by “debt”. Americans tend to have a poorly defined idea, and we need to be very realistic if we want to increase our savings and investment opportunities.

Are there debts that last forever?

Technically, yes. For example, there are debts that people are very hard-pressed to escape because of serious social reasons: child support, taxes, or debts that are associated with fraud or crime. In addition, bankruptcy petitions often are amended when someone has assets or resources that are hidden from the bankruptcy court. Still another example is auto insurance; because it is required by law, it is a never-ending debt.

And yet, people tend to be more concerned about their car payments than their auto insurance. We really don’t know what debt is, do we?

You have me there. Yes, bankruptcy can wipe out debt, but you must ask yourself why it is you want to file. For the average citizen, I am thoroughly convinced that bankruptcy is neither necessary, nor a good idea. While certainly there are cases in which it is the only way to save a home, business, health or marriage, most people file because they feel frustrated by financial debt.

Although it may be against intuition, people never should file for bankruptcy just for the sense of relief. Too many people see bankruptcy as an easy escape, and some even file multiple times!

It is very unwise to choose bankruptcy without first developing a plan for the future. Instead of setting goals and sticking to their guns, some people fall into the same financial traps after they have just finished climbing out. In many ways, having a bankruptcy listed on your credit report for ten years is exactly the same as having an unpaid debt in the center of your credit report.

Do your research so as not to misunderstand bankruptcy. Here on debthelp.com, you will find extensive articles on the subject.

Is there a statute of limitations on collecting a debt?

This is a great question. Most lawyers probably would answer yes, and that it is no longer than four years. However, this is not necessarily true. Most lawyers are interested in only one of your debts, and on that debt they might enforce a four-year collection period. However, in reality, a statute of limitations usually is referring to a breach of contract.

When someone is sued on a debt, they actually are being sued on a “cause of action” to collect a debt. In other words, the law does not specify that you can be sued for a debt, so some might say the statue of limitations applies in this context. To answer this question in more detail, please refer to laws in your state.

Just because something ‘falls off’ your credit report does not mean you do not owe the debt. However, it is pretty unlikely that a company will pester you after the item is no longer being reported. This happens for a number of reasons, like the costs associated with collection, accounting procedures and the amount of the debt.

Are you saying that I should want to be in debt?

Well no, but sometimes it is necessary. Your debt load should match your needs and not your wants. You deserve a nice, clean, safe home. Credit card debt that is not paid in full each month is a different story altogether.

Is there a better definition of debt?

Debt is a sense of personal obligation. I know of one very prominent businessman who filed for bankruptcy and then he and his wife spent the next ten years working to pay off his creditors even though the debts were “discharged.” Somewhere in this family’s actions is the best definition of ‘debt’.