How does settling secured debt compare to settling unsecured debts?

Question

How does settling secured debt compare to settling unsecured debts?

Answer

When people find themselves in tremendous amounts of debt, fear sets in. Their first thought is generally about bankruptcy, believing it to be the only method open to them for escaping the payments they find themselves unable to make. Eventually, however, they begin to realize that there may be other options open to them which could achieve the same ends without having to go through the process and long lasting stigma of a bankruptcy.

Debt settlement companies have emerged in great numbers in the last few years as more and more people find themselves facing huge amounts of debt. Quite often these are a good resource to turn to and can possibly be the answer many people are seeking.

Before you seek their assistance you should do your homework and avoid the charlatans at work out there who are out to simply scam your money. There are reputable companies, just be sure you find one before signing a contract with them.

Also, be aware of what debt you have and what debt these companies can help you with. Most people have both unsecured and secured debt. Secured debt has something of value, usually property of some sort, attached to it. Your home or car are possible examples of secured debt. Unsecured debt is the kind that quite often seems to get away with us. It includes credit card debts, department store cards and medical debts.

Debt settlement companies can only help you with the unsecured debt. They negotiate with your creditors and can help make arrangements that will work for you so that you can eventually pay them off to their satisfaction. Secured debt doesn't operate the same. Since there is property attached to these kinds of debts, the creditors can simply reclaim the property if you are unable to make payments. In cases like these, your only opportunity to procure a settlement of some sort is to contact the creditor yourself. Explain the situation you find yourself in and ask if they have any programs available that can help you. Quite often mortgage companies do have programs they can put you on that will save you from losing your home. They might lengthen the time of your loan, allow you to move payments to the end of your loan time, or lower your interest rate. It is possible also to make arrangements with car lenders, although they don't necessarily have the same flexibility that mortgage companies quite often have. 

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