By Steve Bucci Bankrate.com
If getting out of debt and staying out of debt were easy, everyone would do it.
With over $3 trillion in consumer debt outstanding, that's clearly not the case. Here are some answers to readers' most common questions on dealing with debt.
QUESTION: Should I borrow from my 401(k) or IRA to pay off debt?
ANSWER: By jumping ahead directly to solutions, you might end up solving the symptom but never addressing the cause of your problem. My suggestion is to fix today's problems with today's resources and look forward to a better life tomorrow.
Q: My ex-spouse was assigned certain debts in our divorce, but is not paying and is ruining my credit. What can I do?
A: If you are a joint owner on the account, the creditor is within its legal rights to attempt to collect the debt from you, and the charge-off for this debt will stay on your credit report. Ask your attorney about having the court hold your ex in contempt for not living up to his divorce decree.
Q: Are my Social Security benefits protected from bank levy or garnishment?
A: The U.S. Department of the Treasury requires banks to protect federal benefits from being garnished. But in order for the federal benefits to qualify for protection, they must be directly deposited into the bank account, and the protected amount is restricted to the total of the previous two months of benefits deposited immediately preceding the garnishment order.
Q: Will my fiancee's creditors come after me for her bills after we are married?
A: Any debts that were incurred before the marriage remain the sole responsibility of the owner of the debt after the marriage. Should your new bride's creditors sue in court to collect and receive a judgment, it could be used to garnish a joint bank account that you share with her.
Q: I co-signed a loan for my relative, and he has stopped paying on the loan. How do I protect my credit?
A: If you are concerned about saving your credit, and even if you're not, you may need to make payments on the loan. Because you are the co-signer, the lender has any and all collection remedies to pursue to get you to pay, just as if the car were yours.
Q: Why is my debt that is past the statute of limitations still being reported on my credit report?
A: The statute of limitations on debt varies by type of debt and by state. It has nothing to do with credit reporting.
Q: I have several payday loans that I cannot pay. What happens if I don't pay?
A: If your debt is with a lender who is a member of the Community Financial Services Association of America, a group of payday lenders who subscribe to a code of conduct, you can request an extended payment plan. My recommendation to break the payday loan cycle is to determine if you can borrow the total amount you need to pay the lenders from another source.
Q: I have an offer to settle my credit card debt for less than half of what I owe. Will it help my credit to settle?
A: Once an account is significantly past due, the real damage is already done. Paying off or settling your debts are just different flavors of frosting on your debt-filled cupcake.
Q: I was laid off my job and my unemployment benefits have ended. I can no longer pay my bills. What do I do?
A: While you await an email from your next employer, I want you to conserve as much of your available cash as you can and rely on credit for living expenses. If the worst happens and you wind up with your unemployment benefits as your sole source of income and no savings, you will need to prioritize your debts.
Q: I am a college graduate and have not been able to find a job. I have settled for a low-paying job, and I can't afford to pay my student loans. Can I file bankruptcy?
A: Student loans do not have a statute of limitations. Partial or full discharge or forgiveness of student loans is possible, but the court will need to be convinced that not only your present income, but also your income for a long time to come, will prevent you from paying back the loan. ___ ABOUT THE WRITER Bankrate's Debt Adviser, Steve Bucci, is the former president of Consumer Credit Counseling Service of Southern New England and the author of "Credit Repair Kit for Dummies."