Debt Facts

Quick Debt Facts you Should Know

debtMany people sign up for debt consolidation plans that may save them and for many, this is the right way to go. This is best for those that are thousands upon thousands deep in it. But, there are consequences that come with it that you should know.

First, there is no guarantee that each debtor is going to accept the terms of a consolidation company. You may still be stuck with one or two large debts to take care of on your own. Two, school loans are not always included. Most schools do not accept the terms of the debt consolidation company.

The second thing is what it means on your credit report. There are quick unsecured personal loans. In this way, they can improve their credit score. Still, debt consolidation means a similar thing as having filed for bankruptcy. This means that if you are a candidate for bankruptcy and you are joining a debt consolidation company to avoid that, you may want to reconsider what would relieve you of your debt more beneficially.

Negotiating Past Debt

It takes approximately 7 years for debts to fall off your credit report. Many people do a well-meaning thing that ends up costing them more money and more hassle. When some folks get a hold of some extra money or they are applying for things like mortgages etc.. they contact debtors or collection agencies that own their debt account even if they have stopped making payments on the debt; however, this is not a good move and here’s why.

Example

For example. You simply stopped paying on a debt a year or more has gone by give or take. The moment the unsuspecting person calls the debtor or collection company that owns their old debt and says they want to start payments again–from the moment a dime goes to the collector–the debt date starts again as if it was new.

What to do

debt freeIn this case, before you do anything, look at the credit report. How much longer into the 7 year fall-off period do you have? If it’s nearly done for heaven’s sake, don’t re-start it. If you do it means another 7 year period unless you plan on having the money to pay it off.

Now, if you are in the position to pay it off then do yourself and your newfound windfall a favor and get it settled for a price that is well below what you owe.

Whatever you do, let your credit report and the timing be your guide and you can’t go wrong.