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Debt Consolidation

How Unsecured and Secured Debt Consolidation Loans Can Help People

Debt Consolidation
Debt Consolidation Information.

How Unsecured and Secured Debt Consolidation Loans Can Help People

by Suzy Vanstrusen
Having debt problems you can’t handle anymore? Thinking of filing for bankruptcy? Before doing so, read this article to know how debt consolidation will help you solve these problems. Bankruptcy is not always an option. Think of the impact it will give your credit report. There is still a way to surpass getting stuck with debt. Learn more about debt consolidation loans and two kinds of it. (continued below)

How Unsecured and Secured Debt Consolidation Loans Can Help People

(cont.)
Secured Debt Consolidation Loans
A secured debt consolidation loan is one that requires the submission of collateral The collateral can be a car, home or other valuable asset that belongs to the borrower. A collateral will serve as a guarantee that in case of default, there is still an available source of funding which can be use to repay them.

Most people prefer to submit their home properties because of its bigger value. If you need to pay large amounts of debt with various creditors, you may need to use your home as collateral to get a bigger loan. Nevertheless, there is always the risk that your lender can repossess your property should you fail to keep up with your loan repayment.

A secured debt consolidation loans gives the borrower some sense of freedom. By paying off all your existing debts at once, you can be free from the pressure of dealing with creditors and debt collectors. There is also no need to juggle between different due dates since you’ll only have to submit one monthly payment to your debt consolidation company. Combining multiple debts into one account means paying only one interest rate significantly reducing your total monthly cost.

Unsecured Debt Consolidation Loans

Some people may not have a home or a property to use as collateral. Remember that you can’t apply for a secured loan if you are just renting your home or you are undergoing a mortgage repayment. Others may not feel comfortable in putting their properties on the line. If the same situations apply to you, an unsecured debt consolidation can be a good option. Rather than file for bankruptcy, why not consider consolidating your debts with an unsecured loan?

Because of the absence of collateral, unsecured loans may have much higher interest rates than secured loans. This is why it’s very important to do extensive research and compare lenders before making a choice. Many lending companies offer unsecured consolidation loans through the internet for easier and more convenient application. Still, it is advisable to spend time analyzing your options before signing up for an unsecured debt consolidation loan.

To be approved for non-secured loan, the borrower has to submit a proof of a stable income. In the absence of a collateral, this will serve as some assurance that the applicant is capable of paying. However, because of the higher risks involved, most lending companies or debt consolidation companies will only offer a limited amount of loan. The repayment period will also be much shorter than the repayment period for secured loans.

About the Author
Suzy Vanstrusen is a credit analyst and a writer of the website EZCreditRepairSolutions.com and providing consumers with tips and tricks in repairing your credit. Check the site for more tips on bad credit refinance and credit repair debt consolidation.

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Debt Consolidation

What Is An Unsecured Debt Consolidation Loan?

Debt Consolidation
Debt Consolidation Information.

What Is An Unsecured Debt Consolidation Loan?

by William Doyle
If you’ve reached a juncture in your life at which you are interested in taking some direct and positive action to better your financial situation, you may be considering obtaining a debt consolidation loan. In this regard, there are a number of different debt consolidation loan options that actually are available to you today, including an unsecured debt consolidation loan. This article has been designed to provide you with a general overview about an unsecured debt consolidation loan. (continued below)

What Is An Unsecured Debt Consolidation Loan?

(cont.)
Once you have considered the information that is provided to you in this article about an unsecured debt consolidation loan, you will be in a better position to determine whether or not an unsecured debt consolidation loan is the most appropriate debt consolidation option available to you today.

A Simple, Consumer Friendly Definition of an Unsecured Debt Consolidation Loan
When it comes to lending related issues, technical definitions abound. Unfortunately, technical definition can be of little assistance to a consumer like you who really is trying to make a decision about the propriety of obtaining an unsecured debt consolidation loan.

In simple terms, an unsecured debt consolidation loan is a loan that is designed to provide you with the financing necessary to consolidate your current debt obligations. The unique feature of an unsecured debt consolidation loan is found in the fact that you are not obliged to come up with collateral for an unsecured debt consolidation loan.

This differs from the other major type of debt consolidation loan that does require collateral, logically known as a secured debt consolidation loan. In order to obtain a secured debt consolidation loan, you have to have some property (most often your home) that can be used as collateral for a secured debt consolidation loan.

Will You Qualify for an Unsecured Debt Consolidation Loan?
In this day and age there actually are different types of unsecured debt consolidation loan options available to you. However, with that said, if you want to obtain the most favorable deal on an unsecured debt consolidation loan, you will need to have a credit history and a credit score that is not in the proverbial danger zone. In other words, in order to obtain the best possible deal on an unsecured debt consolidation loan, you will need to have a fairly sold credit history and a fairly (good, actually) credit score.

As mentioned, when it comes to finding an unsecured debt consolidation loan today, there are a variety of options. This includes unsecured debt consolidation loan options for people with bad credit.

The drawback with bad credit unsecured debt consolidation loan options is found in the fact that there will be serious limitations in the amount of money that you will be able to borrow. Moreover, the interest rates (and perhaps other fees and charges) associated with an unsecured debt consolidation loan for a person with a bad credit history and lower credit score will be significantly higher than what is otherwise available for a person with a better credit standing.

About the Author
View more articles from William Doyle on Amazine

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Debt Consolidation

Debt Management, Debt Settlement And Debt Consolidation For Dummies

Debt Consolidation
Debt Consolidation Information.

Debt Management, Debt Settlement And Debt Consolidation For Dummies

by Michael Redbourn
If you read some of the articles that are all over the web on how to get out of debt, and you made a real effort, and gave it your best shot, but just got deeper into the hole every month, then it doesn’t necessarily mean that either you or the systems were at fault. (continued below)

Debt Management, Debt Settlement And Debt Consolidation For Dummies

(cont.)
In many cases the interest and fees on credit cards and other loans are higher than available income, meaning that the only way to really impact the debt would be to either get the interest and fees lowered, or to not only get them lowered, but to get the total amount of debt reduced as well.

And the above is in essence the fundamental difference between debt settlement and debt management, and which one is a right for someone depends almost entirely on their financial situation.

I should probably mention that although debt consolidation and debt management are often thought of as the same thing, they are in fact totally different. Debt management does not involve taking out a loan, whereas the debt consolidation means taking out an equity loan and using the money from it to pay off all your debts, with the only exception being your mortgage.

Debt Management Explained
In order to be accepted into a debt management plan, the applicant needs to have not just a steady income, but also some income to spare after covering his or her living expenses, money that will be used to make a regular payment to the creditors.

A debt advisor, and we’d stress only one that works for a BBB (Better Business Bureau) company, contacts every creditor with the probable exception of the one holding your mortgage, and arranges a reduction of interest rates and fees.

Upon completion of the negotiations, the debtor has a set sum deposited into an escrow account every month and every creditor is paid from it, and although the effect on ones credit rating should be minimal, it will be downgraded, since any restructuring of debt involves a lowering of one’s credit score.

Debt Settlement Explained
Debt settlement is for those that wouldn’t have enough to meet the one monthly payment required for Debt Management, even after both the interest rate and the fees had been reduced, meaning that the actual amount of one’s debt needs to be reduced.

Creditors obviously don’t like doing this, and the debtor will normally have to be several months behind on his or her payments, and the creditor will need to be convinced that the only alternative to Debt Settlement is bankruptcy.

How much your credit rating will be affected by taking the debt settlement route will largely depend on how good or bad your credit score is before you do it.

If your present score is bad to terrible then debt settlement won’t effect it much, but if it’s excellent then it will take a very big hit.

A few bad apples have got the debt settlement business some bad press in the last few months, but the business is not a new one and right now over $20 billion dollars in consumer debt is currently involved in debt settlement programs.

The Association of Settlement Companies (TASC), which is the professional association for the debt settlement industry, has several hundred member companies that are carefully scrutinized, and if you go with a Debt Settlement company that’s BBB recommended then there should be little to fear.

Debt Settlement is extremely labor intensive because deals with creditors often have to be reworked several times, since lenders are not the slightest bit interested in your deals with other creditors, but only in what’s in it for them.

The debt settlement company is therefore forced to return to every creditor that previously agreed with a deal, and present them with a new one based on the last deal made, and it can only provide you with final contract when a deal has been made with every company that’s willing to participate.

Some companies claim, and probably sometimes get a 50% reduction in debt, but this is more than likely a best case scenario and 40% would be good to excellent, and regardless of what you’re promised, be prepared for the process to take months and not weeks, during which time you’ll get harassed on the phone, in letters and by debt collectors wanting their pound of flesh.

About the Author
Michael Redbourn was a film producer, and an award winning film sound editor for many years. He loves and has a natural flare for economics, and one of his websites -> http://need-credit-now.org has a growing number of extremely popular articles about the world’s economy in general, and bad credit loans, debt settlement, debt consolidation, and bankruptcy in particular.

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Debt Beat Down 2009!! Debt Consolidation

Learn How To Pay Off Your Debts with Avalanches Of Snowballs And Snowflakes

Debt Consolidation
Debt Consolidation Information.

Learn How To Pay Off Your Debts with Avalanches Of Snowballs And Snowflakes

The Credit Resourceby Michael Redbourn
The two most common get out of debt systems now being used, are the Snowball system, which basically involves paying off your debts from the smallest to the biggest, and the Avalanche system which means paying off your debts starting with the one that’s charging you the highest amount of interest.

Snowflaking means cutting back on your day to day expenditures wherever you can, even if it means saving just a few bucks on breakfast or lunch, and the money saved is then sent that same day or at the end of the week to whichever creditor you are trying to pay off first, and Snowflaking can be used in tandem with either the Snowball or Avalanche systems. (continued below)

Learn How To Pay Off Your Debts with Avalanches Of Snowballs And Snowflakes

(cont.)
Something that none of the above systems mention is categorizing your debts into what you might want to call, good, neutral and toxic, and well take a look at what that means, and how to do it now.

What Is A Good Debt?
Lots of people will tell you that there’s no such thing as a good debt, but they’re 100% wrong and here are three “good debts”, right off the top of my head.

1) A mortgage

The interest rates are always low compared with other loans, and in spite of the fact that many homes decreased in value over the last eighteen months, the long term trend is, and will be up, and anybody that holds onto a property for a good amount of time sees it rise in value.

2) Federal Student Loans

The interest rates are very low, and a better education should later prove to be a big bonus.

3) Some business Loans

It’s of course possible to take out a business loan, only to see a business fail, but if you take one out and the business flourishes, then it should certainly be classified and a good debt.

When you look to see which of your loans should be paid off first, you should move all of your “good loans” to the bottom of your list.

What Is A Neutral Debt?
Examples of neutral debts would be,

1) A vehicle loan

2) Debt consolidation loans

3) Retirement plan loans

None of the above are what could be described as toxic debt, which well take a look at next, but none of them are “good debts” either, but before we talk about “toxic debt”, let’s fully understand what the term means.

Debt is deemed as toxic if any of the following are true,

The standard or default interest rate is in the double digits, or higher, which typically prolongs the time you remain in debt.

The lender can change rates and terms at any time, with little or no provocation.

Initially very easy payment terms that encourage you to increase your debt to more than you can comfortably repay.

Toxic debts that you might have are,

1) Credit cards

2) Payday loans

3) Title loans

4) Pledges from pawnshops

5) Any high or variable rate loan

Toxic Debts Should Be Paid Off First!

Medical Debt
If you were able to arrange an affordable repayment plan with a hospital or provider then it would be a neutral debt, but if you had sign up for a high interest loan, or are using a provider-supplied credit card to pay it off, then it’s almost certainly a toxic debt.

Other Things To Consider
Maxed out, or near to maxed out credit cards should go near to the top of your list, because they will negatively affect your credit score and trigger higher interest rates from other lenders.

Try to keep all your credit card balances below 75%

If there’s a chance that you might lose your job, then consider accelerating a retirement-plan loan, because most plans require you to pay back 401k and other retirement plans quickly after you stop work, and if you don’t or can’t do it, then the withdrawal will trigger a hefty tax bill.

You’ll get lots of credit cards offers in the mail offering lower interest rates than you’re presently paying, and many of them might be well worth considering and taking advantage of, but great care must be taken before transferring balances.

The fees charged for balance transfers are quite high, and will normally increase the amount of debt by 3-4% so be sure to do the math and make sure that the lower interest rate will more than offset the fees.

What’s more, many of these low interest offers are for fairly short amounts of time, so make sure that the interest isn’t going to get hiked after just six months or so.

Finally, if you’re feeling like you’re losing the debt battle and need a little encouragement, then choose a really small debt and get it paid off quickly, and the satisfaction of crossing it off of your list, and perhaps tossing it into the trash, should provide you with a little bit of a lift, and hopefully give you the determination to soldier on.

About the Author
The author of this article was a film producer, and award winning film sound editor for many years. He has a major interest and flare for economics, and one of his websites -> http://free-from-debts.org has a large number of extremely popular articles about the world’s economy in general, and debts, debt consolidation, debt settlement, and bankruptcy in particular.