Managing Debt: Common Myths and the Real DealManaging Debt:Common Myths and the Real DealDebt is a topic shrouded in mystery and negativity. The fact is, most of us have some form of debt, whether it be a mortgage, student loans, credit card debt, or a car loan, so it is in our best interest to understand how debt works, and our rights when it comes to handling debt. Here are 5 common myths about debt and the truth about them.Myth: Debt is only for “poor” people. Truth: This could not be further from the truth. Debt is a “necessary evil” for most people, regardless of their income. You’ll be hard-pressed to find someone who doesn’t carry some form of debt in today’s society. Another common misconception about debt is that all debt is bad. However, debt only truly becomes “bad” when you can no longer afford to make payments or when affording basic necessities becomes difficult. And the truth is, “bad debt” happens to people at all socioeconomic levels. So whether you have good debt or bad debt, remember that it can happen to anyone and that there is no shame in it!Myth: You can go to jail if you don’t pay your debts.Truth: While this was once the case, the U.S. outlawed debtors’ prisons back in the 1800s. If you fail to pay back a debt, the debtor can be sued and then a civil judgment can be obtained by the creditor or the one that sued the debtor. The debtor, in this case, is summoned to a civil court. Depending on the Court and the jurisdiction (where you were sued) there may be rules that require the debtor to appear in Court. The failure to appear could force a warrant to be issued for your appearance. At that point, the police can jail the debtor until there’s a court hearing, or until they pay the bond. This is not based on the fact that the debtor owes the money, but the fact that the debtor did not comply with Court rules. This is still rare, but cases do pop up here and there. Still, bottom line is it is illegal to throw you into jail for owing a debt! Don’t trust a creditor if they threaten to throw you in jail and be careful about how you handle the legal proceedings once your debts have reached that stage. To be safe, consult an attorney to find out the exact rules and procedures surrounding your debt.Myth: Telling a debt collector to stop calling you will make them go away.Truth: This is only partially true. You can tell a debt collector to not call you again at work and they have to comply. You can also request that they stop contacting you altogether, but in accordance with the Fair Debt Collection Practices Act, you must make the request in writing in order for them to be obligated to comply. It is important to note that just because a debt collector stops contacting you, it does not mean the debt has gone away. You are still responsible for paying that debt! Myth: Paying a debt in collection will remove it from your report and raise your score.Truth: When you pay a debt that is in collection, the debt collector is supposed to update your report to reflect the fact that that debt has been paid. However, the debt collector is not obligated to remove it from your credit report. A debt that has fallen into collection will generally stay on your report for 7 years, unless specifically agreed upon by the collector to remove it once it has been paid in full. And unfortunately, paying a collection account without getting it removed will not improve your credit score. As long as it is listed on your credit report as having been in collection status, it will have a negative impact on your score. It is also important to note that you should always check your credit reports with all 3 bureaus (Experian, TransUnion, Equifax) to ensure that the collector did, in fact, update your report to show that it has been paid. It is also important to note that you should always check your credit reports with all 3 bureaus (Experian, TransUnion, Equinox).Myth: Bankruptcy is the only way out of debt.Truth: While bankruptcy is necessary in some cases, it should really only be looked at as a last resort. Often, there are other, much simpler ways of climbing out from underneath mountains of debt. It may be as simple as consulting with a financial advisor to rework your budget and come up with a debt repayment strategy, or you may decide to go one step further and consult with an attorney that specializes in debt resolution. Either way, be sure to research all your options before resorting to bankruptcy. Leslie TayneLeslie H. Tayne has more than 15 years' experience in the practice area of consumer and business financial debt-related services. Speaker, Author of Life & Debt, Attorney and Founder of the Tayne Law Group, P.C., Leslie is working towards reshaping the debt industry by offering real, proven solutions to help her clients get back on the road to financial freedom.