PhotoMillions of consumers have spent the last four years working to get a handle on credit and debt issues. Some have been more successful than others.

Recent data show that credit card debt declined slightly immediately after the start of the recession but has begun to climb once again. Consumers have been trying to function with less access to credit and to better manage their debt.

Some consumers are hampered in these efforts because they simply don't have a good grasp of how credit and debt works. In some cases they may believe things that just aren't true.

According to Money Management International, a non-profit credit counseling agency, there are six primary myths about credit and debt that get consumers in the most trouble:

Myth #1: There is an easy way to fix bad credit

No person or company can legally remove accurate items from your credit reports for a fee. The Fair Credit Reporting Act (FCRA) states that delinquent account information can remain on a consumer's credit bureau file for a seven-year timeframe that starts 180 days after the account becomes delinquent.

Myth #2: Bankruptcy discharges all debts

Debts not dischargeable in bankruptcy will generally include back taxes less than three years old, student loans, alimony, child support and debts incurred through fraud. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires a bankruptcy counseling certificate before you can even file.

Myth #3: A collector can't call others about your debts

This might be one of the more unpleasant realities of debt. The Fair Debt Collection Practices Act (FDCPA), while provides many important protections to the consumer, does in fact allow a debt collector to contact other people. They are only supposed to do this to find out where you live, what your phone number is and where you work. Fortunately, the collector may not divulge the reason for the call to anyone other than you or your attorney. Also, if you don't tell them otherwise, they can even call you at work.

Myth #4: A divorce decree matters to your creditors

It doesn't. Your divorce decree is an agreement between you and your spouse, not your creditors, on how your debts and assets will be divided. Since your creditors were not involved in the settlement and had no input on the results, the contracts you signed with your creditors have not changed and cannot be changed by the divorce decree.

Whoever signed the original contract with the creditor will still be obligated to pay the debt after the divorce. That means you are still obligated on these debts and the creditors can report the derogatory status of these accounts on your credit bureau file.

Myth #5: Your creditors cannot change your interest rate

The CARD Act of 2009 added some important consumer protection. However, credit card issuers can make key contract changes to your account terms and agreement, including rate increases, with 45 days' notice. You should also know that many creditors will now raise your interest rates if your credit score declines, even if you have paid their particular account on-time and as-agreed, and it's within their rights to do so.

Myth #6: If my car is repossessed that ends my responsibility

Not really. After a vehicle is repossessed, the lender will most likely sell it at auction to the highest bidder and apply the proceeds of the sale to the balance owed on the car. If the sale price is not sufficient to pay the balance due, there will be a "deficiency balance" remaining. You would then be legally obligated to pay this deficiency balance.

"Fortunately, making financial decisions doesn't have to be a confusing experience," said Jo Kerstetter, vice president of financial education for MMI. "Educating yourself about money is the best defense against costly mistakes."

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