The Difference Between Secured Debt and Unsecured Debt

Debt is a necessary part of everyone’s financial life, and it is important to understand the differences between the various forms of credit available today on the market. In general, there are two types of loans, secured debt and unsecured debt. Both of these types of loans have distinct advantages and disadvantages.

About Secured Debt

Secured debt is a loan backed by collateral, that is, an asset which can be taken back or repossessed if the borrower is unable to make their payments. The most well-known examples of secured debt is a home mortgage.

Because the bank or lender has the option to take the assets of the borrower, secured debt typically has lower interest rates than unsecured debt. The amount of credit extended in these types of loans is based on the credit history of the borrower and the value of the assets being put up as collateral. Because of this, these loans tend to be issued for higher amounts than loans given out as unsecured debt.

About Unsecured Debt

Unsecured debt is a loan that is not backed by any collateral. The most well-known example of this type of debt is a credit card. Other examples include payday loans and personal loans. Unsecured means that nothing can be taken back by the bank in the event the borrower chooses not to pay. This means that the lender cannot take away the home, car, or other possessions of the borrower, nor can it garnish wages or government checks such as Social Security.

This type of credit is extended to a borrower based on his or her credit score and credit history. Consumers with better records can obtain better interest rates on these types of loans. Consumers with poor credit histories and scores are often denied for these types of loans, but they can often reapply and be approved by offering some type of collateral, effectively making the loan secured debt.

Because there is no asset for a bank or lender to repossess if the consumer does not make his or her payments on time, the amount of credit extended as unsecured debt tends to be lower than the amounts extended by secured debt.

The Significance of Settling Your Debt With a Debt Settlement Company

If you’re facing major financial challenges in your life and you’re having a difficult time paying off bills, settling your debt through a debt settlement company could help you recover faster than if you were to try to do it on your own.

The trials and tribulations that come with unsettled debt can follow you (and your family) for the rest of your life and sometimes can be passed on to your family and children. In most cases, when you leave behind unpaid debt that can be collected through family and can cause resentment and additional turmoil.

There are basically two options you have when it comes to debt settlement: 1. Do it yourself. 2. Hire a debt settlement company to take care of the dirty work for you on your behalf.

Of course, you are always free to choose to try to settle your debts yourself, but this can take a great deal of discipline and focus over a period of years to settle completely. Also, your bargaining power to pay less than what you owe is reduced when doing it on your own because debt collectors can be nasty and unforgiving.

However, when they’re up against a team of professional settlers, it’s like having a good poker hand to play against your opponent. Instead of one good card in a bad hand, you have multiple good cards creating a good hand.

Professional debt settlement companies are known to pull out all the punches to fight on your behalf behind the scenes. Also, your bargaining power increases dramatically. This means if you owed for example $100,000 to various companies, a debt settlement company can reduce that to as low as 40%, or $40,000. This is a huge savings compared to paying the entire $100,000 (not including interest payments on the full amount).

In most cases, a reputable settlement company can pay off your entire debt in as little as 2 years – sometimes 12 months depending on current income, debt, and determination to pay it faster.

On average, honest debt settlement companies will only take on clients with a minimum of $10,000 in debt. If you’re dealing with anything less than $10,000 in debt would be a waste of time and money for both the company and debt holder as it would be easier for you to pay it off through normal means.

The way debt settlement companies work generally follow this template: People call and talk to someone about settling the debt. The settlers take on the client and assess their debt situation. The settlers begin the process of negotiating a lower debt on your behalf. If successful, the settlers get a 14% to 18% fee of the settled debt amount usually as payments over a period of 12 months.

Although most settlement companies prefer not to give advice on how to save and manage their money, they often do recommend solutions and programs on how to control spending behavior.

The biggest fear most people have is damaging their credit score. And, the reality is it’s unavoidable. If you’re settling a large amount of debt for less than what it’s worth, chances are it will show up on your report as “paid – recovered” or “paid – settled”. Not “paid – in full”. Obviously, paying in full is preferable to help sustain your credit, but for most people paying in full is not an option and would prefer a quicker fix.

However, just because you won’t get full credit for settling a debt doesn’t mean you can never recover. It’ll take time. But, it’s a far superior option than not having paid anything at all. Besides, it won’t take longer than 12 to 24 months to get your credit back to where you want it to be after your debts are settled.

A word of caution: Debt settlement companies are largely unregulated. They are known to prey on the desperate and can be a bigger pain in the butt than the debt collectors themselves. Therefore, due diligence is required to ensure you get the best service possible at a reasonable price.

In conclusion, settling your debt with a settlement company can be a significant moment in your life because it’ll free you from threats, pressure, and the stress it causes you.

For more information about settling your debt with a debt settlement company, you can just visit our website. We also provide credit card debt settlement programs for your credit card debt problems, so just make a tour on our site.

Tips to Choose Your Personal Finance Software

Managing your financial situation today is not as simple as it was a few years ago. A simple calculator and an account book will not help you as the financial world of today is extremely advanced and needs a lot of work on it. However, you can only get so far in planning without seeking some serious help, if you have the proper personal finance software. In case you are interested to become debt free, then this tool is a must to have.

What are the top #2 benefits of such an idea?

Benefit #1: Time saving.

One of the most significant advantages is the time saving capabilities. All you have to do with your personal finance software would be to input your personal data including your income and any purchases. Then, it will take care of the rest for you. Then, everything is sorted out for your future planning on your computer.

Benefit #2: Automated bill payments.

Another feature that you will have is the ability to well organize your automated bill payment. Any well chosen tool does the very simple job of using the internet for this purpose. It will link your checking account with your bills. You can also specify which day of the month a payment should go out.

Doing this, you will avoid paying extra money because of any delay in paying your bills. Indeed, living debt free is an option that this tool can really achieve.

Does this concept always work on all PCs?

There are programs written to work on all kinds of systems. For example, in the market today, you can get personal finance software for MAC that includes the excellent liquid ledger.

Avoid this #1 top rated common mistake!

Most of the people hurry to accept expensive offers without devoting reasonable time and energy to look for free options. Indeed, you can also find top rated products for free for a certain amount of time. In this context, I would advise you to ask first for a 30-days free trial before you buy anything.

Well, but how to choose the best personal finance software?

The following is 4 killer tips to help you in choosing the right offer for planning your financial situation easily and quickly.

1. Automation- Try and find a program with the maximum amount of automation. The more work it does, the less you will have to.

2. Pre-Made Forms- Try and find tools with more number of pre-made forms. All you will have to do is enter information on these forms.

3. Loan calculators- These are handy programs that help you compare different loans and help you choose the best option.

4. Internet Connectivity- Choose a program that is able to connect to the internet. This will help a lot especially in payment of bills.

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