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Debt Consolidation

 

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UNSECURED DEBT VS. SECURED DEBT
Nearly every American owes money to a creditor for some form of secured or unsecured debt. There is a big difference between secured and unsecured debts.

Secured debts are loans or credit that are backed by some sort of collateral/property.

Unsecured debts are loans or credit that do not have any collateral behind them. The only type of debt that is eligible when partaking in a debt consolidation program are unsecured debts.

Common types of secured debts:
The two most common types of secured debts are home loans and car loans. Your house or your vehicle act as collateral with your lender. Meaning, you are guaranteeing that you will make the payments for your loans, otherwise the lender has the right to repossess whichever of the two you do not pay. So, if you take out a car loan or a home loan, make sure you can afford the payments before you agree to the loan. Then, make sure you make your payments on time and in full every month until the debt is paid off.

Common types of unsecured debts:
As mentioned, the only types of debt that we can consolidate for you are unsecured debts. Unsecured debts are not associated with any form of property. The most common types of unsecured debts are credit cards, personal loans, student loans and medical bills. You can learn more about what kinds of debt are eligible for consolidation.

Unsecured debts work very differently when compared to secured debts. For example, lets say you buy a new couch for $4000 with your credit card. If you fail to make payments on the credit card bill, you are not going to lose the couch you purchased. You will be effected though. When you don't make credit card payments, your credit score goes down, interest rates go up and late penalties incur; resulting in you owing more money than you previously did. If you continue to not make your payments, the end result will be your account going into collections. Going into collections will really hurt your credit score! Learn more about the impact of collections.

Take charge of your finances today!
GET A FREE QUOTE FOR CONSOLIDATING YOUR DEBT!

Whether you have secured debts or unsecured debts, a valuable method for regaining control of your money is by developing a budget.


 

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