Debt Relief Companies » Unsecured Credit Card Debt http://www.debtreliefcompanies.net Wed, 08 Feb 2012 00:41:43 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 What Is Unsecured Debt? http://www.debtreliefcompanies.net/what-does-unsecured-debt-mean/ http://www.debtreliefcompanies.net/what-does-unsecured-debt-mean/#comments Fri, 21 Sep 2007 17:37:07 +0000 Scott http://www.debtreliefcompanies.net/what-does-unsecured-debt-mean/ more »]]> Basically any debt that is not “backed” by an asset is unsecured debt. When you buy a home, the bank gives you a loan that is backed by the home itself and you sign papers that state should you be unable to pay the bank back, the bank has the right to take over your home in lieu of payment. In that case the bank has foreclosed on your home and will sell it in order to get their money back. Of course this is a last resort for all parties involved and on that can sometimes be avoided through mortgage loan modification to avoid foreclose.

The same is true of your car when you take out a car loan. These are examples of secured debts.

By contrast, when you spend money on your credit card, that is essentially a loan that lasts a few weeks until your credit card bll is due. Those loans are unsecured because you did not pledge to give up anything when you used that card. In essence, all you did was promise the credit card company that you would pay your bill including the extra fees if you pay it late.

That is why the interest rates and fees on credit cards are so high, because they are unsecured debt. It is also why you can negotiate unsecured credit card debt to try and reduce what you owe through a debt settlement program.

]]> http://www.debtreliefcompanies.net/what-does-unsecured-debt-mean/feed/ 0 How Debt Settlement Reduces Unsecured Credit Card Debt http://www.debtreliefcompanies.net/what-is-debt-reduction/ http://www.debtreliefcompanies.net/what-is-debt-reduction/#comments Mon, 15 Jan 2007 17:00:56 +0000 Scott http://www.debtreliefcompanies.net/what-is-debt-reduction/ more »]]> If you read this article about unsecured debt you will understand that credit cards are promises to repay with nothing to back them up (like a physical asset or other collateral). Because of this, they can be negotiated (like any other promise or contract) should the borrower have trouble living up to thier obligations.

A debt settlement company acts as your negotiation agency and will attempt to reduce the amount of debt that you owe by negotiating with your creditors. There is a standard debt settlement process that you will go through on your way to becoming debt free.

Debt settlement companies can usually get your creditors to legally accept less than you owe them – sometimes up to 65% less but the results vary widely based on which company you use, your income, and your ability to remain on the program set up for you.

Given your inability to repay everything you owe, your creditors are happy to get at least some of their money back on past due accounts so you end of paying less than you originally owed.

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