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Secured and Unsecured Debts
Debts do seem to be all alike, but it must be known that there are actually many different kinds of debts available. A borrower might ask what does it matter if there are different kinds of debts, as long as the payments to be made with them remain the same? But the distinction becomes all too obvious if the borrower is unable to make the payments in time and needs to find out ways and means to get rid of the debt. This can be done through consolidation or refinancing. At such times, it is necessary to know the different kinds of debts and what they entail. Here we discuss the two important types of debts secured and unsecured debts.
A secured debt is one for which the borrower needs to put some collateral. Collateral is a kind of a financial security for the lender. In case the loan is defaulted upon, the lender has the legal right to dispose of the collateral in any which way and recover some of the loaned amount through it. This is known as repossession. But it must be remembered that repossession may not let the borrower go off the hook. If the collateral is not able to compensate for the entire principal amount, then the lender would demand for the remaining amount. Then there would also be several fees to be paid for the foreclosure. Collaterals are usually needed for home and car loans. One further disadvantage with secured loans is that the borrower is not at liberty to negotiate on the interest rates later into the loan. Debt consolidation may also not be possible with such loans, since the lender has their own security. Even filing for bankruptcy may not free the borrower from the loan.
Unsecured debts are those for which collaterals are not needed. People with good credit ratings or those with credit card loans are generally the ones who get unsecured loans. Medical and commercial debts may also fall in this category. With these loans, the lenders do not have any security of the amount they have lent, but they are assured that the borrower will be in a position to pay back the loan. Despite that, if a person defaults on an unsecured loan, then it could go into collections and there could be legal action. However, this happens only as a last resort. Lenders are usually open to negotiations on such loans and borrowers can look at debt consolidation or settlement as a way out of the indebtedness. Credit counseling usually resolves the problems of repaying unsecured loans.
For all the advantages unsecured loans provide, they have higher rates of interest than the secured loans. Most borrowers in the US today have a mélange of secured and unsecured loans. Whatever be the type of the loan, its management is the most important factor. Sometimes people need to begin by borrowing and repaying some secured loans before they can qualify for unsecured loans. This would improve the credit ratings. Anyways, both kinds of loans are potentials for improving credit ratings when paid back in time.
Secrets of Debt Relief
A government relief is one sure way of paying off old debts from credit cards. The lean economic times have made it impossible to avoid debts due to rocketing gas and commodities prices. Because of this many people have who have to get the means of survival have resorted to cutting their spending because their budgets are not adequate to put up with rise in prices. A rising credit card debt can indeed be frustrating and the situation can make one seek desperate ways of getting out of the rut but sometimes disappointment is inevitable. The times are tough and because it has proved hard to maintain a good budget most people have found themselves resorting to using credit cards which has thrown them into mire pit of bad debts and bankruptcy.
One of the secrets of debt relief is the getting a government relief so that one can stop wetting the pants on how to many those huge payments at the end of the month. Government grants are usually availed by the government to those who are in dire need of being saved from bad debt and bankruptcy. The government will always give away grants every year and a lot of money is spent in this, as it understands the need of getting its people out of debt. A government cannot thrive when its citizens are in bad debts and so this acts as a strategy of stimulating the economy and the government knows the importance of this.
The next task in seeking debt relief is to look around for the possible opportunities for grants. It is however imperative to know that grants are usually determined by the applicants ability to get out of debt and the personal needs of the hour. A person who is in dire need of getting out of debt and has more pressing needs is likely to be a beneficiary of government grants. The first step of getting debt relief from government grants is to first determine the amount of debt that one is in. This should include gathering all the documents and all the receipts and then calculate the amount of debt that has accumulated. Applying for a government grant requires one to know the precise amount of debt that one has. One can also refer from the internet and check the credit card report.
Seeking government grant for debt relief requires one to consult various sources and the internet can be a good source. Grants.com usually provides crucial information on grants. These websites are helpful as they give one the opportunity to apply for several grants thus increasing the chances of getting out of the rut. One is supposed to download the application form and then fill it before sending it to the relevant office. Federal grant catalogs are also resourceful sources of seeking grants and attaining one can be first step to getting debt relief. These catalogs can be found in community libraries as well as in civic centers. One however requires being persistent and should apply for as many grants as possible. Usually the first grant does not do too well and so it requires much pushing until one gets approved.