The definition of long term debt from an accounting perspective, is any amount outstanding for more than one year. Applying this definition then – and adding the term “problems” means we are looking at a situation where you, or your business, is unable to repay a debt for a period greater than twelve months.

Usually by this time, if private arrangements haven’t been made with your creditors, the debt will have either been passed to a debt collection agency or the creditor will be pursuing you through the civil courts. If your financial situation has deteriorated and you have multiple debts of this kind, you’re probably trying to deal with a barrage of disturbing phone calls and letters or at worst, the sherriff coming to enforce a court judgement against you.

The latter is more likely in the case where your creditor has elected to pursue the matter themselves rather than pass it to a debt collection agency. These agencies purchase the rights to the debt for a fraction of its original amount – this is how they make their money, by collecting the full amount if they can. It is also the reason why occasionally, you may receive a “special discount settlement offer” from them, if you pay within a specified time frame. If they have purchased the debt for 20 percent of its value and can get back even just 60 percent, they are still profitable and don’t need to waste further time and money pursuing you.

Any outstanding long term debt problems have an expiration date, after which, no one can enforce a judgement against you. By statute law, the period is usually seven years. But here’s the thing – this seven year period is calculated from the last date you acknowledged the debt in any way, either by making a repayment of any kind, however small, or by correspondence. For this reason, as the seven year statute of limitations approaches, you may find that debt collection agencies begin to pursue you more vigorously – even possibly sweetening the deal by very generous discount offers. This may work in your favour if you are inclined to repay the debt. Alternatively, they may increase their intimidation tactics, even proposing to send their representatives to visit you at your home or business premises. However, you have the right to not feel threatened and should waste no time letting them know this. The law is on your side here. They are running a business and don’t need their reputation tarnished by police action so they will back down. If they wish to get serious, the courts are the place to do this. The debt collectors will continue to remind you however – “this is not going away”.

So for long term debt problems, what are your alternatives?

You could elect bankruptcy. Although this will allow you a clean fresh start with no more debt problems, it will still affect your credit report for the next seven years from the date of bankruptcy. After enduring long term debt problems this far, do you really want to wait another seven years until you’re able to easily get loans, store credit etc?

One of the most effective strategies available today, is to use the services of a reputable financial advocate. These professionals become the mediators between you and your creditors or debt collectors. They know the law and are skilled in the art of negotiation with debt collectors and the like. More often than not, you will find that they can have your overall long term debt vastly reduced, even cancelled. Not only that, but as part of the process, they will also ensure that any bad entries on your credit history report are also expunged. Imagine how relieved you might feel, if after years of enduring your long term debt problem hanging over your head, you are able to walk away with not only the obligation to repay a fraction of the original amount, if anything, but have a nice clean credit history to go along with it?

You can start living your life again and looking forward to the future!

Miriam is an Australian specialist consultant who provides credit repair information to people in debt and has assisted hundreds of people who need help with debt problems.

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