4 Answers To Common Debt Questions

Piling debts are becoming more and more common in today’s consumerist society plagued by a severe economic crisis and therefore many people have debt questions they need answered. Not only are more people becoming subject to debt, the amount of debt is increasing, making people more conscious of the fact that they are struggling to make ends meet.

Consumers finding themselves in these situations are crying out for help from financial experts to solve their monetary issues through professional words of wisdom. With so many people asking about debt, it is undoubtedly clear that the simple principles of what to do are unknown to the masses. This is manifested in the fact that people continuously ask the same questions and are repeatedly failing to get applicable answers.

However, here are five questions commonly asked by those in debt, with five logical and simple answers to follow, which will enable you to understand your rights and perhaps your solutions to recovering from financial turmoil.

1. Which Debts Should Be Paid Off First?

This is one of those common debt questions. Those struggling to compete with debt collectors repeatedly slamming warning letters through their doors are often unaware of where to even start. With store cards, credit cards, overdrafts, and bank loans piling up, it can be difficult to truly understand the most serious threat among them. Which of these debts is the most detrimental to hang on to?

The first thing to consider is the priority of the things you owe money for. For example, paying your mortgage is top priority, as the repercussion of missing payments could be court action and subsequently house repossession. Equally taxes that go unpaid can also lead to far more than piling interest rates, such as fines, court action, and prison time. This can also lead to you having to declare yourself bankrupt.

Beyond these payments, the choice is yours but it is sensible to think about it the most logical way you can. For example, if you have a credit card which charges very high interest rates and a free overdraft, you need to pay the credit card first to prevent extra charges.

2. How Can a ‘Credit Report’ be Fixed?

One of the biggest and most commonly mistaken debt questions is how to fix your credit report. There are several online companies that say that they can fix your credit rating for you. They basically claim that they can wipe out data that show that you have missed payments and so on, to build your credit rating up. Any company that says this is lying; it is impossible.debt questions

Your credit report will typically show all behaviour from the last seven years, so effectively, to deceive a lender by telling them you have a good credit report, you have to wait around seven years for it to be wiped. However, most lenders are not interested in seven years worth of data. In fact, someone who had trouble before but who changes their behaviour often shows a lender a sense of moral responsibility. A lender is most interested in the last 48 months of your credit history, so changing behaviour now is actually the best idea.

3. Are Spouse’s Liable For Their Partner’s Debts?

Generally the answer is no, spouse’s are not liable for their partner’s debts. However, this can change if the people concerned have signed a joint credit agreement. An agreement of this nature, by definition, states that both parties are responsible for paying the full amount of debt owed. This is known as ‘joint and several liability’ and involves signing a document to make this legally binding. This can apply to your mortgage payments, so if you feel you are in this position, it is best to speak with a professional to see whether you have liability or not.

4. How Likely Are You to Lose Your Home?

If you are very far behind on your mortgage repayments, the likelihood is that the lender will take legal action which may result in the loss of your home. This also goes for those renting; you may be evicted from the property.

However, this is not the only time you may be subject to house loss. If you are truly in irreconcilable debt, you may be forced to declare yourself bankrupt. In this case, your house is likely to be lost in an attempt to repay as much of the debt owed as possible.

Despite this, the problem may not always go this far. There are other options which could help you without you filing for bankruptcy. For example, you could very well draw up an individual voluntary agreement (IVA) which protects you from further loss and allows you to consolidate debts to pay purely what you can afford.

Hopefully, these simple answers have given a little insight to stop you panicking about overwhelming debt. Sometimes the answer is simpler than it seems and common sense and logic play a huge part in helping to resolving those in debt. If unsure, experts can always guide you on the way to go, but be careful of extra hidden fees on their part.

Mark Harris is a freelance writer who lives in White Rock, BC with his wife. An avid kayaker, he often feels that he can’t get enough of the outdoors. Always looking for new places to kayak, he’s very grateful of the advice he received from www.debtconsolidationloans.uk.com as he feels it’s helped him to be able to afford to expand his horizons. He now likes to look further afield for kayaking hotspots all over the globe.

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