10 Things Millennials Should Know About Paying Off Debt

As a lawyer, I have seen a fair share of young adults fresh out of college who were struggling with debt. It’s not uncommon to hear even older adults with young children ask questions involving paying down debt, the laws, and what their rights are. Sadly, I find many Millennials and members of Gen Y to be misinformed about debt repayment laws. As a lawyer, I want you to know these ten tips about paying off debt.

1. You should seek out leniency if you’re experiencing financial hardship. In many cases, creditors are willing to negotiate with people who had fallen on hard times. Hardships such as a job loss, major illness, and similar issues may also allow you to qualify for government assistance that can help you make life easier. While this is not always going to work, it works often enough that it’s worth giving a try.
2. Creditors are not allowed to harass you or threaten you. As a debtor, you have rights, too. If you’re getting harassed, threatened, or if the creditors began to reach out to people to embarrass you, you may have a good reason to call an attorney.
3. The sooner you pay off your debt, the better. It helps you stay out of debt, and also helps you improve your credit score. Most creditors will never fine you if you pay off your debt early.
4. There’s more to debt relief than just debt consolidation. Before you decide to go for debt consolidation, read up on other options for debt relief. You may find that debt settlement, debt negotiation, and even debt management education may be a better fit for your particular situation.
5. Debt snowballs faster than you think. If you want to see how quickly debt accrues, play around with a credit card interest calculator. You’ll soon find that the reason that minimum payments are so low is because they are designed to keep you in debt longer, or even make your monthly payments negligible. The lesson here is simple – interest is something you have to watch out for.
6. Bankruptcy should be a last resort. Bankruptcy is not a magical wand that waves away your debt without you having to do anything. It’s possible that you could lose your home. Bankruptcy also can have an effect on your credit score, and cause you to lose your car. In other words, there’s a lot more loss than you likely would want to deal with. If you have any other option available to you, pursue it.
7. Many debts can be forgiven through a debt settlement agreement. Most of the debts that fall into this category are unsecured loans, such as credit card debt. If you’re in too deep to pay it off normally, they’ll usually forgive the rest of the debt if you can provide a reasonable lump sum to pay off the bulk of it. These agreements are usually done with the help of a lawyer to ensure that they are actually binding.
8. While most debts can be forgiven through bankruptcy, there are some that are deemed “unforgivable.” By law, you are still required to pay child support, alimony, and college tuition bills – even if you have declared bankruptcy. Defaulting on any of these can cause you to deal with major consequences ranging from wage garnishment to jail time, depending on a number of factors. Because of this fact alone, you need to talk to a professional before you make the commitment to declare bankruptcy.  
9. You have a right to a factual credit report. If your credit report was dinged by an error given by a credit reporting agency, then you have a right to dispute it and get that error removed. That’s part of the Fair Credit Reporting Act.
10. Generally speaking, you are not held liable for fraudulent charges that you didn’t make. If you find fraudulent charges on your cards, most banks will wipe them off. If you catch them within 30 days, then they may be legally required to do so. You do not have to pay for a crime someone else committed against you!

The bottom line is that you need to be informed about debt laws in New Jersey, and that the knowledge that you have will give you the power you need to take back your life. If you need legal advice or help with debt settlement, give us a call today 201-491-0059