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6 Questions and answers on debt related topics which you should know
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Posted On :
Sep-24-2011
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Article Word Count :
726
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Several people have lots of questions on debt related topics. They search for the useful resources in various websites. This article deals with 6 important debt questions and answers which consumers should be aware of.
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Debt is a complex and puzzling subject for various people. Most of them are unable to understand its various aspects properly. Their minds are often brimming with questions without knowing the correct answers. Have a look at the article to know about the 6 popular debt questions and answers swarming in the minds of the consumers.
Questions and answers on debt related topics
Here are the 6 debt questions and answers you should be aware of:
Q.1 What is a secured and unsecured debt?
A. Secured debts are the ones which are backed by collateral. Mortgages and auto loans are considered as secured debts. In a mortgage, you take out a loan by pledging your home as security. In the event of loan default, the lender has the right to seize and sell your home to collect his money. The same rule is applicable for the auto loan also.
Unsecured debts are the ones which are not backed by collateral. Here you just sign a contract with your creditor and take out the loan. However, in the event of loan default, creditors can file a lawsuit against you.
2. Which debts do I need to repay first?
A. It is a little controversial question. Some people are of the opinion that debtors should pay off the highest debts first. But others say that it is better to repay the smallest debts first. However, the main point is you’ll need to clear all your dues eventually.
3. Am I responsible for my spouse’s debt?
A. If you have a joint credit account with your spouse, then both of you are equally responsible for the debt. This means that the creditor can after you if your husband fails to make payments on the account.
In the community property states such as Texas, you’ll be responsible for your spouse’s debt. For instance, if your husband has incurred a debt after getting married to you, then you are legally liable for the debt even if you don’t owe it.
Q.4. Can I get arrested for a loan default?
A. This is one of the debt questions frequently asked by the consumers. Most of the consumers fear that they will be put into jail by the creditors in the event of loan default. But this is completely a myth. It is true that creditors can sue you for not repaying the debt. But this does not mean that you can be arrested. This is because non-repayment of debt is not a criminal offense.
Q5. Will I lose my house due to non-repayment of debts?
A. You can lose your house in case of secured debts. If you have taken out a mortgage against your house and you are not able to make payments on the loan for several months, then the lender may decide to foreclose your home. Here your house will be auctioned by the court. Once the house is sold, the sale proceeds will go to the lender. Thereafter, the eviction process will start.
Q6. What is the significance of a Sol period?
The Statute Of limitations (Sol) period on the debt signifies the time period within which your creditors can sue you for non-repayment of debts. The Sol period on a debt usually starts from the date of first default.
The Sol period on a debt is different in various states. For example, the Sol period on a debt in Alaska is 6 years. But the Sol period in Texas is 4 years.
Another debt question often asked by the debtors is about the difference between the consolidation program and loan. Most of them think that the debt consolidation program and loan is the same thing. But there is a subtle difference between the two. In a consolidation program, the debt consultants negotiate with your creditors and chalk out an affordable payment plan for you.
Debt consolidation works in a different way. Here you take out a big loan from a financial institution and pay off your existing debts. Henceforth, you only make a low single monthly payment on the new loan.
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Article Source :
http://www.articleseen.com/Article_6 Questions and answers on debt related topics which you should know _85249.aspx
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Author Resource :
Ryan Smith is a contributory writer associated with Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles. View our community articles for more information on debt related topics.
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Keywords :
debt questions and answers,
Category :
Finance
:
Finance
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