Here’s Why Changing Your Name Won’t Clear You From Deep Debt
Marriage and divorce are two of the most common reasons why people change their names. But if you’re deep in debt, you might be fantasizing about changing your name and running away in an attempt to escape your creditors. However, changing your name won’t clear you from deep debt—your credit report will stick with you even if you adopt a new moniker. Here’s why.
Why Changing Your Name Won’t Clear You From Deep Debt
The reality is that changing your name won’t clear you from deep debt. Even if you don’t tell your creditors your new name, they’ll still be able to track you down because your name change is public record.
Plus, you’ll still have the same Social Security number. Your credit history is linked to your SSN, not just your name, so your debt will follow you even if you adopt a new moniker.
A New SSN Won’t Clear Your Debt Either
Trying to get a new Social Security number isn’t the answer either. It’s difficult to get a new SSN, and the Social Security Administration will only approve your request for a different number if you have a legitimate reason, such as:
You’ve been a victim of identity theft, harassment, or domestic violence
Another person was assigned the same SSN as you
You have a religious or cultural objection to numbers in your SSN (you’ll have to show documentation of your religious affiliation)
Trying to escape legitimate debts isn’t an approved reason for an SSN change. Even if you managed to get a new SSN, the Social Security Administration would cross-reference your old and new numbers in your file, which helps ensure your credit and earnings history isn’t lost. So your debt and poor credit can’t be erased just by changing your SSN.
What To Do If You’re in Deep Debt
When it comes to debt, the only way out is through. You can’t avoid it by changing your name or Social Security number. You have to face your debt head-on and make a plan to deal with it.
About a third of Americans don’t know how much of their monthly income goes toward debt repayment, which suggests they’re in denial about their finances. Sticking your head in the sand and ignoring your debt will only make your financial situation worse.
So step number one is to sit down and figure out how much you really owe. Make a list of all your debts and include the minimum monthly payment, the balance owed, and interest rate. Then grab a calculator and add up the balances of all your individual debts so you can see how much you owe in total.
If your consumer debt equals more than half of your annual income, it may be time to consider bankruptcy. Chapter 7, the most common type of bankruptcy, wipes away many types of debt, including personal loans, credit card debt, and medical bills. Keep in mind that student loans, recent taxes, and child support obligations usually aren’t forgiven. But you’ll be in a much better position to pay your student loans and child support if you don’t have high-interest credit card debt hanging over your head.
Work With a Credit Counseling Agency
If you’re not ready to consider bankruptcy, you can work with a nonprofit credit counseling agency instead to make a plan to pay off your debt. Their services are usually free and can help you climb out of debt by making a realistic budget.
Some agencies may even renegotiate your debt for you so you have more manageable interest rates and monthly payments. In some instances, you can even send your debt repayments to the credit counseling agency. They’ll distribute the money to your creditors for you, which can take a lot of financial stress off of you. The Justice Department has a helpful list of credit counseling agencies that can help you find a reputable organization near you.
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