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Secured and Unsecured Debt - The Differences Explained

All of your debts may be classified in one of two ways secured or unsecured. Secured debts are those "secured" to an asset, like your car with a car loan, or your house with a mortgage. With secured debt, if you stop making payments, the lender can repossess the asset to which your debt is secured.

Unsecured debts are not tied to any asset. Examples include most credit card debt, medical bills, personal loans and debts for other types of services. These are the types of debts our company specializes in negotiating.

The Truth Behind Your Car Loan
When borrowing money to purchase an automobile, the lender holds the car's title until the debt is fully repaid. For this type of loan, the lender may repossess your car without any notice if you stop making payments. In cases of car repossession, getting your car back may require you to pay the full balance due on the loan, as well as towing and storage costs. In many cases, however, the lender may sell the car, often for less than what you still owe, leaving you responsible for the difference.

So if you fall behind on your car payments, consider working with the holder of the title of your car to sell it yourself. Paying off the debt and avoiding repossession will definitely help your credit report. Read about credit reports here.

Mortgage Problems - Act Quickly To Solve Them
In a case where you find yourself falling behind with your mortgage payments, be sure to contact your lender immediately to avoid foreclosure.

Many of our clients contact us to attempt to negotiate better terms on their mortgage, but we cannot.

While we specialize in negotiating better settlements for consumers with unsecured debt, we cannot help anyone with secured debt. In this case, the best way to go about getting yourself out of mortgage trouble is to work directly with the lender. Most lenders will work with you if they believe that you are acting in good faith and are merely having temporary problems.

In fact, some lenders may reduce or suspend your payments for a short time. Upon resuming regular payments, you may have to pay extra toward the past due. Another avenue that may be open is changing the terms of your mortgage by extending the repayment period to reduce the monthly payments. Ask about any fees charged for these changes, and consider how much they add to the total cost of your loan.

If you are having trouble with both secured and unsecured debt, our program may be able to help. Frequently, by negotiating lower settlements with unsecured creditors, we can alleviate pressure, which allows you to handle your secured obligations easier.

Contact us here for a free consultation.

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