Clear Debt Solution - Debt Settlement Blog

A commonly asked question in the debt settlement industry is, "What is the difference between secure debt and unsecured debt?" The answer is simple!

Secured debt can be defined as any debt attached to property or collateral. Items that can be included as secured debt include Auto Loans, Debts at Law Offices, Home/Real Estate Loans, IRS Tax Debts, and Student Loans.

Secured debt can offer lower interest rates. Secured debt might also cause borrowers to learn how to budget rather quickly as to not loose the attached property or collateral. A downside to secured debt however, might occur when the lender knows they could benefit from the monetary relationships they develop with borrowers. Thus, the lender will allow the borrower to negotiate a payback rate and take out more cash upfront.

Unsecured debt can be defined as any debt not attached to property or collateral. Items that can be included as unsecured debt include Auto Repossessions, Collection Accounts, Commercial Debts, Credit Cards, Judgments, Medical Bills, Personal Lines of Credit, Retail Store Cards, and Unsecured Loans.

Unsecured debt can be a bit more tricky than secured debt. Unsecured debt occurs when a lender loans the borrower money without having the security of attached property or collateral. This type of debt presents a higher risk for lenders which therefore presents a more expensive loan for borrowers. In addition, the more risk a lender takes on will increase the interest rate a borrower must pay back on top of the principle.

Thus, unsecured debts become destined to higher rates than do secured debts. Due to the attachment of property and collateral, debt can vary between secured and unsecured. Secured debt presents more safety to the lender, but unsecured debt presents more safety to the borrower because they are not placing any risk on any attached possessions.

When shopping around for a reliable company to assist with debt relief, make sure to do your homework before you commit. There are hundreds of companies that make the decision of which one to choose quite difficult. Honest and trustworthy companies do exist, just be sure to research the pros and cons before making a concrete decision.

A concept to consider is to use the Better Business Bureau to cross-reference the company you're thinking about using. When conducting an internet search for the Better Business Bureau, there are multiple categories to look under. You can search under consumer, business, or charity to see their ranking within the industry.

In addition, each of these categories have sub-categories to further investigate. You can refine your search by individual business and/or charity, complaints filed against companies, as well as programs and services the BBB offers. There is also a resource library that offers helpful tips, books, and information regarding laws.

Further options become available when examining complaints against companies. You can inquire about the United States complaints and negative remarks, as well as Canada's complaints, and even a combination of both. There are complaint statistics, inquiry statistics, and statistics sorted out by industry in the complaints category.

Another unique characteristic about the Better Business Bureau is they work with a wide spectrum of companies. They work with accredited businesses and uncredited businesses. The BBB also offers alarms that alert against any suspicious behavior or anything that might raise worry or doubt reflecting a company. The site also provides reliability reports regarding auto companies, food and beverage advertising, military lines and so on.

The Better Business Bureau is only one avenue to explore when feeling out a company's reliability. Just keep in mind to stay away from companies that have multiple negative remarks and complaints against them. Look for positive and honorable companies that will truly have your best interest in mind. When the right company is selected after careful research and cross-referencing with the Better Business Bureau, the choice will pay off in more ways then one.

Seeking debt relief can be a challenge when selecting the right company for the right situation. There are various types and numerous debt relief programs that exist around the country. Depending on what type of debt and what the individual situation is, people in financial hardships do have choices.

One option that works well for some debtors is consolidation. There are many consolidation loan companies assisting people with debt relief. Consolidation companies help with both secured debt and unsecured debt. Consolidation loans can be taken out to help with auto loans, mortgages, home equities lines, new home loans, as well as home refinancing. Consolidation loans can also help with student loans.

While it is nice to have all debts compiled into one account, there are also downsides to consolidation loans. There is risk for higher interest rates and larger amounts of debt then the borrower had originally owed. Also, you are putting your property and assets up as collateral for the loan, so if a borrower defaults on the loan, they run the risk of losing the property.

As with any type of debt relief, be sure to read the fine print when enrolling with a consolidation loan company. Borrowers often think they are saving by compiling all the accounts into one large account, but this is not always true. Lower interest rates might not be available to borrowers who have previously struggled with credit issues. Hidden fees and late charges might exist within consolidation loans, as well as deals with zero-percent interest rates that sky rocket if one payment is missed.

However, consolidation loans can be a very helpful tool to get out of debt if the borrower has the right mindset. If the payments are made on time and the credit limit is never exceeded, consolidation can be a great match. Also, consider that your credit report could have negative marks placed on it since you are using a lender to help get out of debt.

After looking at the ups and downs of consolidation loan companies, the choice is ultimately up to the borrower. Consider all the risks presented with secured debt consolidation loans. Watch out for sneaky deals that make you think you're saving, but are actually paying the same interest rate, if not more of the total amount owed when borrowing for a unsecured debt. Conclusively, acknowledge that consolidation loans do work and do get people out of debt. So, good luck in your hunting and getting out of debt!

Ogeden Nash once said, “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” Often, this quote holds true for people who find themselves buried in debt. One such option for such individuals is credit counseling.

Credit counseling was originally developed as a means to collect past due debts. First developed were debt management plans, where the debtor sends the credit counseling agency a lump sum. In turn, the agency distributes that sum to the credit card companies each month, providing the debtor relief from late fees and charges and the convenience of only making one payment. This also offers debtors potential for lower interest rates, as well as removal of referenced delinquent payments from the debtor's credit report.

Although this idea seems great on the surface, there are downfalls to this debt relief option. Credit counseling is often referred to as non-profit, but in actuality the credit agencies used for credit counseling are backed by the credit card companies. This type of program appears like a Chapter 13 Bankruptcy on the debtor's credit report. This is so because the debtor is using a third party, such as a trustee does in a Chapter 13, to pay off their debts.

Credit scores are not repaired through credit counseling. Only time and improving your payment history by making on-time payments can repair negative marks. Credit counseling can also be expensive because you are funding the credit card companies by paying monthly service fees as well as a start-up fee.

Another disadvantage of credit counseling was stated by the website, National Consumer Law Center. Credit counseling has sprouted in the past decade, "Unfortunately, however, complaints about deceptive practices, improper advice, excessive fees and abuse of non-profit status have grown significantly as this new generation of credit counseling agencies has gained market share."

Although negative traits exist within credit counseling, this option can also be very helpful for people. As with any debt relief option, look at the details carefully and commit to your decision one hundred percent before choosing which company to entrust your money with.

Failure, collapse, and defeat are all words that come to mind when thinking about bankruptcy. Bankruptcy can be defined as the inability or impairment of a person or organization to pay their debts to their creditors. It is an option that benefits both the creditor as well as the debtor.

Within the last few years, bankruptcy laws have undergone reformation and now offer different options for filing. There are four different chapters of bankruptcy, but typically only two are ever thought of.

The most common form of bankruptcy is Chapter 7. This bankruptcy option is available to couples and individuals, as well as businesses and partnerships. Within Chapter 7, a debtor's assets can be exempt or nonexempt. Assets that are taxable properties are sold by a trustee of the courts to pay the insolvent amount of debt owed to the creditors. But, assets that are not exempt can be taken control of by the trustee and sold in order to pay creditors as much as the proceeds allow. One positive attribute of a Chapter 7 is that any earnings made after such a chapter is filed, are the debtors to keep.

The second most common bankruptcy form is Chapter 13. Individuals who have a regular income qualify for a Chapter 13. As defined by The Moran Law Group, a regular income is, "unsecured debt less than $336,900 and secured debt less than $1,010,650." This chapter usually lasts between three to five years and has a repayment between ten and one hundred percent, based on the debtor’s amount of debt and their income.

A debtor in a Chapter 13 is allowed to keep property, but must make regular payments to the Chapter trustee, who in turn pays the creditors. These regular payments are drawn from the debtor’s future income. While debtor’s are repaying their debts in a Chapter 13, they are given a means to prevent repossessions and foreclosures that does not exist within a Chapter 7.

The next bankruptcy option is a Chapter 11, which is usually used by businesses and partnerships. Individuals whose debt exceeds the amount of a Chapter 13 may also file. Usually the court oversees the debtor's business operations and assets, but allows the debtor to remain in control. A plan suggested by the debtor is submitted to the courts, and if accepted by a majority of creditor, will bind both parties to the terms of the plan.

The final option for bankruptcy is a Chapter 12. This is a basic reorganization modeled after a Chapter 13. The difference between the two, however, is that a Chapter 12 is for family farmers. Debtors keep their property, but repay creditors out of future income.

Careful examination of each bankruptcy chapter is necessary. Be sure to understand each option before choosing which to file. After close attention is paid to each option, debt relief is available to debtors and will allow for peace of mind.

After placing close emphasis on which chapter to file, look at all attributes that define bankruptcy. Components that pertain to bankruptcy include effects on credit, penalties, and time frame.

Debts are wiped clean when choosing the bankruptcy route for debt relief. However, delinquent payments and charge-offs still appear on the credit report; only now they appear as having a zero balance rather than fraudulent marks. Proof of this can be accessed in a credit report, a history of debt and transactions accumulated by the debtor.

As with any debt relief option, negative effects accompany people on their journey to financial freedom. Filing for bankruptcy stays with people for seven to ten years. Nevertheless, credit history can be repaired.

Following bankruptcy, people who have filed can attain credit again. Claims made before filing do not have a hold on future income, therefore people have the opportunity of being more deserving of credit. A negative credit history does not mean the end of the world, rather, it stays in the past. Sure it will take some work to reestablish and build credit, but with time, saving money, and learning new spending habits, good credit will become available again.

When declaring bankruptcy, all debts of the individual must be listed. Regardless of the asset's worth, if the asset is secured or unsecured, and/or if the asset is non-dischargeable, each debt must appear at the filing. If any debt is neglected and left out of the program, the individual who is at risk of committing perjury. This is a serious crime and is punishable by a court of law.

Collectively, bankruptcy can be a promising avenue to go down for people seeking debt relief. As with any form of help, there comes positive and negative aspects. When considering filing, explore all different bankruptcy chapters. Look at and understand the effects your credit will undergo, the time frame it'll take to become debt free, and all the other details surrounding bankruptcy. Once all proper steps are taken, financial freedom will eventually surface and allow debtors peace of mind.