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What is Unsecured Debt Consolidation?
Debt consolidation is one of the fastest growing ways that people are dealing with debt today. It can lower your bills, help you manage all your bills and take all the pressure off of you. The question remains, what exactly is unsecured debt consolidation? Before we answer that we must know, what exactly are unsecured debts?
Unsecured Debts
Unsecured debts are debts that you have that are not backed by anything. In other words, your debts have no collateral. For example, a mortgage would be a secured debt because it is backed by your house. An auto loan uses your car as collateral. An example of an unsecured debt, when your debts are not backed by collateral, is a credit card. Credit card debt is not backed by collateral, you simply pay off your debts in a timely matter but if you do not there is nothing the credit card company can take away from you. They can ruin your credit score and maybe even take you to court for your money, but they can’t actually take away any of your physical belongings.
Unsecured Debt Consolidation
Unsecured debts are the kind of debts that can get out of hand the most. Since you do not have to back it with any collateral there is not much to deter you from continuing to pile up these debts. You are not going to take out multiple mortgages or car loans because, most likely, you only have one house or very few cars. It can be pretty tempting to get multiple credit cards and before you know it you may be racking up credit card debt, or any other type of unsecured debt.
Unsecured debt consolidation can do wonders for the immense amount of debt you may have. When you get professional debt consolidation all your debts will be combined into one monthly payment for you. The company that provides you with the unsecured debt consolidation will assume all your debts and pay them all; in return you will have to send them one lump sum payment each month which they will spread out to all your debtors. They basically do all the work for you and make your life much easier to live.
Your monthly payments will be lowered as well, although the length of your payments will increase as you pay the debt consolidation company monthly. It is worth it, however, to pay the company longer in turn for lower monthly payments and the ease of only making one lump sum payment every month.
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