New Castle News

Money: Dave Ramsey

April 5, 2013

Dave Ramsey: Commerical debt seldom forgiven

NEW CASTLE — Dear Dave: I have some old debts that have been forgiven. Should I still pay these if and when I have the money? — Matt

Dear Matt: First, you need to double-check and make sure the debts have been officially forgiven. Commercial debts, such as old credit card debt, are almost never forgiven. They might be in default, or it may be that the company has written it off, but that’s not the same as being forgiven.

Years ago, my grandfather loaned me money when I was in college to pay for part of my tuition. He forgave that debt not long after, so I didn’t owe him the money morally, legally or in any other way. But in a commercial setting, meaning you’re dealing with a bank or other lender, that doesn’t happen.

If a credit card company decides to take less than the original amount owed, that’s a business decision that has changed the terms of the deal, both morally and legally. Sometimes they’d rather have a bird in the hand rather than promises in the bush. You don’t have an obligation to pay the original amount because the terms of the deal have been altered.

Forgiven is forgiven. That means the deal and any obligation is completely wiped out and gone. But chances are, Chase or MasterCard aren’t going to call you up and forgive the debt. — Dave

Dear Dave: My younger sister moved to Atlanta, and she came to live with my husband and me a few months ago. She’s 19, has a job, and is attending a local college. But even though she’s working, she hasn’t said anything about helping out with utilities or paying rent. We don’t need the money, but do you think it’s time for us to push her out of the nest so she can start living as an adult? — Molly

Dear Molly: The way you’ve described your little sister makes me think she’s a pretty good kid. She’s doing all the right things for someone her age, and it doesn’t sound like you’ve got a party animal or drug addict in your home. In my mind, this is the kind of person you want to help.

In a sense, you’re acting as surrogate parents to this young lady. If it were my little sister, I’d let her live in the house without paying rent as long as she was living smart and moving in a positive direction. To me, this includes working, saving money, and going to college. At the moment, you’re enabling good, positive behavior. You have a chance to be her biggest cheerleader and prepare her for the future.

But if things change and she starts behaving irresponsibly or living a lifestyle you don’t approve of, then it’ll be time to put the brakes on the deal. But right now this kid’s a rock star. Thanks to the generosity and support shown by you and your husband, she can gain traction for a successful launch into the world as a smart, responsible adult. I think it’s awesome. — Dave

 

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