Options For Secured Debt Settlement

Secured debt settlement is the least expensive and quickest way for a borrower to get out of debt. Also referred to as secured debt negotiation, this is for borrowers whose debts are secured by property such as a home or automobile. If the loan is not paid off, the lender can get ownership of the security. Secured debt settlement is ambitious and direct. This is the best option for people who have been considering filing for bankruptcy. Secured debt settlement, if accomplished properly, does not have the crippling effect bankruptcy has on a person’s credit report and FICO scores.

Although there are misconceptions about many debt relief programs, each actually vary greatly from the other.

Debt Consolidation

Debt Consolidation is also known as a Consolidation Loan. This is the replacement of several loans with just one loan, usually with less monthly payment but extended repayment period. A borrower of a secured loan can consider secured debt consolidation when assessing his or her options.

Bankruptcy

The bankruptcy process discharges the borrower from huge debts. Borrowers should not use bankruptcy until after all options are exhausted. The ramifications of filing for bankruptcy have long-lasting and far-reaching effects - up to even 10 years in some states. The rules for filing Bankruptcy protection have recently changed, and it is even more difficult not to "wipe the slate clean". Thus, bankruptcy should only be considered as a last resort.

Hiring a Settlement Lawyer

It would be advisable to hire a debt settlement lawyer especially if your loan is secured. A debt settlement lawyer will, in all probability, be able to deal better with a lender. Statistics and research have shown that when a borrower approaches his or her lender to discuss a settlement, the borrower still ends up settling 75% of each and every dollar owed. On the other hand, a skilled debt settlement lawyer will able to bring this down to 60%.

Remember though, that secured debt settlement takes time to accomplish because of the negotiations it entails. If you have a deadline on which your settlement must be done, then you have added on to the tasks of your debt settlement lawyer, whose bargaining position has been weakened by the deadline. Thus, it would be good to plan things well ahead of time.