The current national debt figure for the United States of America is approximated at around $25 trillion. More people than ever are borrowing and taking longer to pay back their money. The figures involved are astronomical, $25 trillion is an almost incomprehensibly large amount of money - 25 followed by 12 zeros - that equates to roughly $85,000 of debt per adult and child in the country.
It's no surprise though.
Every day, the regular consumer is sold the idea of borrowing more, and more often than not they buy it. They are sold the idea of a richer life and a better quality of life. More and more though, people are finding themselves in too much debt.
When people reach the 'too much' boundaries, it is very rarely because they've taken out an enormous loan - it is usually because they have smaller amounts of debt in many places, coming at them from all sides; store cards, bank loans, credit cards, payment schemes for expensive items etc.
The longer the situation is left, the worse it will get - this the first fact of debt. The longer a borrower is unable to pay back what is owed, the further into debt he or she will find themselves in.
Liable for debt?
The first question you have to ask - is what debts are you actually liable for? Being liable for debt means that you are the one that has to repay it. Just because you are being asked to repay something does not necessarily mean that you should legally be paying it back - at least by yourself.
You will be liable for let if you were the sole person who signed an agreement to borrow money. If you signed the agreement with other parties, then all of you will be liable for the debt. Just because you are married or in business with someone, for example, does not mean you are liable for their debts.
If you have signed as a guarantor for someone (for example, in a tenancy agreement), you will be again liable for any payments the signing party does not make.
What to pay back first?
If you do have spare cash afloat (even if it is left over from another borrow), use it to pay back the highest priority debts. People tend to think that wherever possible, they should pay back the high-interest debts, such as store cards etc. This is generally a bad move for the average indebted person. A high priority debt is something like a mortgage, or a loan taken out against your home. You could risk losing your home if you do not keep these payments up. Because these are relatively low interest debts spread over a long period of time, they usually tend to be more manageable on your terms. You could ask to stretch out your repayment term, for example.
Store cards and credit cards can be managed by taking out another, lower interest and long-repayment term loan. This is known as debt consolidation, and is discussed in another article. Or, if a borrower's situation did get very difficult, courts can asses your situation and ask you to pay a certain amount back each month to your credit and store card loaners. |
