Misconception #9: Debt-management companies, like AmeriDebt or Consumer Credit Counseling Services will straighten the credit mess out for you.
For those that have no will-power, debt-management companies help you 'manage' your debt by collecting one monthly payment from you and then spreading it out among your creditors, with whom they have worked out lower payments and lower interest. They normally try to have your debt paid off over a five year period.
This is not debt consolidation, like we've discussed before. When you use one of these companies and then try to get a mortgage, you will be treated the same as if you had filed a Chapter 13 bankruptcy. Your credit will be trashed, so avoid this if possible. The other problem with these types of programs, as in the case of debt consolidation, is that they do nothing to change the behaviors that got you into trouble in the first place.
If you are determined to go this direction, then Consumer Credit is probably the best. The FTC has already shut down AmeriDebt for fraud, but here are plenty of others out there waiting to take advantage of you.
Misconception #10: I saw this kit that I can buy and it will show me how to get the credit agencies to remove all of the mistakes I've made in the past.
This is a total scam. The Federal Fair Credit Reporting Act states how consumers and creditors can deal with the credit bureaus. Bad credit drops off your credit report after seven years. Bankruptcies drop off your credit report after ten years. The only other time that anything can be removed is if you find a legitimate error, write to them stating your case, and asking them to correct the error. Anything else one of these 'repair kits' tells you to do is probably fraud, which can have a go directly to jail card attached.
Misconception #11: Your divorce decree says your spouse has to pay the debt, so you don't.
As a tax advisor, I've had to deal with many divorced people and the problems that come associated with them. This misunderstanding is one of the worse. While a judge can approve how you have agreed to split all of your assets and liabilities, he has no authority to take your name off of a debt.
Even though you are divorced and the decree states you are not responsible for the debt, the law states that as long as your name is on the debt instrument, you are responsible for it. So, if your ex-spouse doesn't pay the debt, you still owe it. The only way to prevent this is to make sure that all of the debts are refinanced out of your name or force the sale of the item. Anything other than a clean break will come back to haunt you.