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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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