There are two types of loans, namely, secured and unsecured loans.
Secured loan Secured loans are loans, which have collateral, attached to them in the form of a lien. A lien is a legal claim on one's property till a debt secured by the property is paid off. In other words, a lien gives the right to claim a person's property if an obligation is not discharged. A mortgage loan that is a loan secured by your house involves a lien. The mortgage company holds a lien on the property as a security for the repayment of the debt. Mortgages including first and second mortgages (home equity loan and home equity line of credit) and car loans are examples of secured loans. Secured loans are not negotiable in any way. Get free consultation to deal with secured loans. Get free consultation to deal with secured loans.
Unsecured loan Unsecured loans allow you to obtain services or goods on credit in exchange for your verbal or written commitment to pay the creditor back. These loans are not secured by collateral. Such loans involve medical bills, credit cards, commercial loans, consumer debt and personal loans. In case you fail to pay off these debts, the only way left out for a lender is to take legal action. Calculate your total debt using the debt calculation form and start off to overcome your debt burdens. Debt consolidation is applicable only with unsecured loans.
In case you borrow $100 from someone and are unable to pay back it is advisable that you go for debt consolidation. The debt consultant can negotiate with the creditor to eliminate the late fees and taxes, which have been added to $100 because you could not satisfy the repayment obligations. In most cases, the creditor agrees since he has not many options left. Sometimes he even reduces the principal amount.
A creditor can approach the court with the matter. But this means additional money and a lot of hassles. Therefore, it is better to allow a debtor repay his debt through debt consolidation. Through proper negotiation with the help of a debt consultant, you may find that you just have to pay $60 in order to be debt free. However, this depends on how good a rapport you have with the creditor.
Disclaimer Legal Information Is Not Legal Advice This site provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
Consumer Credit Counseling Information, Debt Management Plan Information, Debt Settlement Plan information, Credit Counseling, Credit Score, Consumer Credit Counseling Service, CCCS, Bill Consolidation, Credit Repair, and Debt Consolidation is not advice, and we recommend you consult a licensed credit counseling agency, debt settlement attorney, and/or licensed debt management plan administrator in your state if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
