Unsecured Debt

In this day and age with the economy failing and consumers looking to do something about the ever increasing pile of bills, many don’t know what to do about their debt – or even what kind of debt they have. They are flailing in a sea of debt insecurity and confusion, and are not sure where to go from here.

First of all the basic premise is that unsecured debt is anything that is not attached to something. A credit card, a medical bill, etc. – any bill that if you don’t pay it they cannot come take something back. Secured debt is anything that is attached to something that could be taken back if not paid for. If you stop paying your mortgage they will take your house; if you stop paying your auto loan, they will come take your car.

That being said there are also options for dealing with the debt. There is debt consolidation, debt settlement, and debt counseling. Debt consolidation is the process of taking all of your debts and “consolidating” them into one monthly bill. You usually get a debt consolidation loan which enables you to pay everything usually with less interest and thus a lower monthly payment.

Debt settlement is the process of getting all of your creditors to take less than what you actually owe them. In this case a portion of your debt is forgiven, and you pay them back less than what you owe them – and the amount you did not pay usually goes on your taxes as income for the year.

Debt counseling is the process of signing up with a reputable company who helps you figure out a budget and a repayment plan to pay off all of your debt. This is a great way to get back on top and in control of your debt and a great way not to end up there again.

 

 

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