Home motorcycle price 5 debt questions you might be afraid to ask

5 debt questions you might be afraid to ask

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Talking about debt can be awkward or embarrassing, leaving you silently worrying about your own growing balances or the finances of a family member.

Here are the answers to a few questions you might hesitate to ask:

Will my debt ever get so old that I won’t have to pay it?

Not really. Many debts that you might worry about – credit card balances or medical bills – have a statute of limitations. It varies by state, but is generally three to six years from the first missed payment or the most recent payment. Most negative ratings disappear from credit reports after seven years.

But you still owe the debt. And debt collectors can ask for payment, even if they can’t sue you.

Advice: There are many ways to manageold debt, but be careful, otherwise you may accidentally reset the statute of limitations, leaving you open to legal action.

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Will I get stuck with family member’s debts after they die – or vice versa?

It depends on the debt and how the finances of family members are connected.

Assets left after death can be used to pay off debt. Most of the time, any debt left over when that money runs out is a loss to a creditor.

In some cases, however, a family membermay have to pay. Co-signers, such as joint credit cards, mortgages, or other loans, are responsible for any remaining balances. And in community of property states, the surviving spouse is responsible for the marital debts.

Tips:Pay attention to co-signing on credit accounts. And have enough life insurance to cover your debts.

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Can I be arrested for debt?

Technically, no. Federal law prohibits debt collectors from threatening you with arrest or jail.

But debt collectors can sue for payment, and about 90% of the people they sue do not appear in court. This leads to a default judgment ordering the refund, and some collectors have used arrest warrants to trick consumers into complying with those orders. It is rare, however. Usually the courts will order payment from your salary or bank account.

Tips: Know your rights when dealing withdebt collectors, and never ignore a court summons.

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Is there a maximum amount of debt I can take on?

The short answer is no. Lenders may offer more credit than you can repay.

Advice:Debt can help you achieve goals like owning a home or building a business, but be realistic about what you can pay off.

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Will Bankruptcy Wipe All My Debt?

Alimony and child support obligations cannot be waived in bankruptcy. Student loans, tax debts, and judgments can also be difficult to eliminate.

Advice: If you’re struggling with crushing debt, consult a nonprofit credit counselor and bankruptcy attorney to see if bankruptcy might make sense.

FOLLOWING:

How to pay off a debt

When bankruptcy is the best option

How to build a budget

Sean Pyles is a writer at NerdWallet, a personal finance website. E-mail:[email protected].

Nerdwallet is a USA TODAY content partner providing background information, commentary, and web coverage. Its content is produced independently of USA TODAY.


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