Unsecured Debt: What is it?
When it comes to debt, there are many different types. Unsecured debt refers to debt that is not attached to any collateral or obligations.
For example, if you do not pay your mortgage, then your house will be taken away from you. The house would be considered collateral. You can also use a car payment as an example of debt that is tied to a collateral. If you stop making payments on your car, it will get repossessed.
The debts listed above are not unsecured! Therefore, you cannot get a settlement for them. In order to get a debt settlement to help you pay off your debt, the debt must be unsecured.
Here are a few types of unsecured debts:
Credit Card Debt
Credit card debt accumulates over time. As long as you continue to make the minimum payments each month, your line of credit will be available for your use.
The longer you wait to pay off your credit card debt, the more you will owe as the interest accumulates. Many people find themselves stuck with a large debt to their credit card company that they are unable to pay off.
That is why debt settlement is so beneficial. It helps you pay off your unsecured debt in just a couple of years so that you can be debt free.
Signature Loans
All that is required for a signature loan is your signature saying that you will pay the loan back.
Signature loans are known to have a higher interest rate since there is no collateral. To get a signature loan, you usually need to have a good credit history to show that you are capable of paying off your loans.
If for some reason, you are not able to pay your signature loan back, and get stuck with major debt, you should consider debt settlement. Since signature loans have no collateral, they qualify as unsecured debt.
Private Student Loans
Private student loans are usually funded by banks or credit unions, not the federal government.
While federal student loans don’t require you to begin making payments until after you graduate, private student loans require payments to begin while you are still attending school.
Even though federal student loans tend to be more popular, private student loans can help you cover more expenses. In addition, federal student loans have a borrowing limit. Many people end up taking out private student loans to help cover additional costs.
Another reason that federal loans are more popular is because students don’t realize that they have other options. Private student loans allow you to choose a repayment plan that works with your risk tolerance.
Since private student loans are a form of unsecured debt, debt settlement is an option if you find yourself having trouble making the payments. If you have a federal student loan, unfortunately, you are on your own.
Old Repossessions
Repossessions stay on your record for up to 7 years. Having a repossession on your record will affect your ability to make major purchases.
Even if your repossession was voluntary, it will still be on your record. The only way to clear your record from the repossession is to pay it off, which you most likely are not able to do on your own.
If you have an old repossession on your record that is holding you back, talk to a debt settlement company to see if they can help you settle your debt.
Department Store Cards
Many people get easily carried away when shopping at department stores, especially if they have a line of credit through the store.
Department store credit card debt is easy to accumulate, but not so easy to pay off. Department stores have so many different items on display for you to purchase. If you are using a department store credit card it can be difficult to realize how much money you have accumulated on your card.
If you find yourself drowning in debt from department store purchases, debt settlement is a great option for you.
There are many different types of unsecured debt. Luckily, you have options when it comes to getting rid of your unsecured debt. If you have unsecured debt, and need help becoming debt free, contact us today. We want to discuss your debt settlement options with you.