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If you have a lot of debt, one thing you might consider is debt consolidation. There are two different basic types of debt consolidation – that for unsecured debt and secured debt. Unsecured debt consolidation is what we'll be talking about. What is unsecured debt? Unsecured debt is any debt that doesn't have collateral attached to it. As an example, most credit card debt is unsecured. That means that when you acquired the credit card, you didn't put up collateral in exchange for having a lender give you that credit card. In other words, if you don't pay off the balance on a credit card, the lender or credit card company cannot seize your possessions in lieu of being paid the balance owed. Instead, what happens is that that particular account gets turned over to a collection agency. By contrast, secured debt is something that has collateral attached to it. That means that if you don't pay this particular debt, the collateral can be seized. For example, a mortgage is usually backed by your house itself as the collateral. If you don't pay your mortgage, the mortgage lender can seize your house. Benefits and drawbacks of unsecured debt consolidation When you engage in unsecured debt consolidation, you are taking several smaller sums and consolidating them into one large loan. Usually, what happens is that you take your credit card balances, for example, and pay them off with a consolidation loan in one lump sum. Then, you become responsible for that consolidation loan instead of the individual balances on your credit cards or other unsecured loans. In some cases, when you take out an unsecured debt consolidation loan, you do so with a debt consolidation company. Oftentimes, the company that consolidates the debt buys the debt, often at a discount. You can shop around for companies that will cut you in on the savings they get. This can help you save money in the long run. However, be careful. Because unsecured debt is something that the lender can't come after you for (other words, you're not going to lose your house or other important possessions because you can't pay this debt), you and your house and other important possessions are relatively safe even if you find yourself in a situation where you can't pay the debt off. However, if you take out an unsecured debt consolidation loan, that loan is likely to be considered secure, so that you'll have to provide some collateral for it. You also have to then be at risk of losing whatever you put up as collateral if you can't pay that loan off. In short, is unsecured debt consolidation a good idea? It is ONLY a good idea if you are in a position whereby you know you're going to be able to pay that debt back. If you're not, stay away and simply pay back your credit cards yourself slowly, over time and as you're able, while taking care of your most basic needs such as rent, food, etc., first. But this IS a much better option than bankruptcy for many reasons, not the least of which is the long term negative effects of bankruptcy on you. For more insights and additional information about Unsecured Debt Consolidation as well as getting some very aggressive and free online debt consolidation quotes, please visit our web site at http://www.debtconsolidationstrategies.com
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unsecured debt consolidation, debt consolidation loan, credit card consolidation,
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