Getting into a debt trap is a serious financial problem which needs your attention. You can get rid of debts if you focus on being financially organized. Start by assessing your financial situation and how you can repay the debts. There are so many ways which may help you pay off debts. But at the same time, you should take account of the important things related to paying off debts.
 

Paying back debts on time is beneficial for financial well being. But you must in keep in mind certain things before you go ahead and repay your debts.
 

1.    Time limitation on collections:
 

A specific time limit is set for the collector to try and collect outstanding debt. As per law, the tenure starts on the last date of activity on the account. The tenure varies depending on the type of debt you owe. For example, for debts like credit card or medical bills, usually 3 to 6 years time limit is provided. It may differ from one state to another. Once the specified time limit is crossed, the lender can no longer try and force you to pay off debt. If the debt is valid then you are still accountable to pay off it. You will be free from the debt only if you are declared bankrupted.

2.    Connection between your old debts and your credit scores:
 

The most important component of credit scores is payment history.  If you make late payment or miss a payment then negative mark shows up in your credit score report. The more you delay to pay off debts and the more you miss to make payment, the worst it could do to your credit scores. After certain period of time, if you are still not able to pay back debts then it will have the worst hit on your credit scores. Negative marks will continue to show up in your credit report for up to seven years. Within this period, it will be really tough for you to convince the lender for loans. Older debts generally have less impact on the credit scores. Paying off older debts is not that helpful in improving scores.

3.    What will happen if you don’t pay back:
 

If you don’t pay back the loan amount then it will affect your credit scores and you will have to face the collection process which can be annoying. Sometimes, paying off older debts turns beneficial for you if you are opting for car loans, mortgage loans etc.

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