When you accrue debt, either by taking out a loan or making purchases on a line of credit, you have a legal responsibility to repay your lender. If you dont abide by the terms of your contract, you could end up in court.
Significance
Your contract with a lender enables it to take legal action against you if you fail to adhere to the repayment terms listed.
Facts
According to the Federal Trade Commission, consumers who share joint accounts are legally responsible for any debts incurred under the account, even if they did not make the purchases or had no knowledge of the purchases.
Features
If your lender has collateral, it can legally seize the item when you dont pay your debt. If it doesnt, it may sue you. A court that acknowledges your legal responsibility to repay the amount your lender claims you owe will grant the lender a judgment against you.
Effects
The court will help your lender enforce your legal responsibility to repay a debt by granting it the right to garnish your wages or bank accounts following a lawsuit.
Warning
You could end up with a legal responsibility to pay debts that arent yours. If a lender sues you and you do not respond to the lawsuit, the court will automatically decide in the lenders favor and grant it a judgment against you.
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