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Credit Card Debt Consolidation versus Unsecured Debt Settlement Relief

Consolidating all your debt into one monthly bill may seem like a great way to take control of your financial situation. However, we urge you to be very careful when considering credit card debt consolidation, or the consolidation of any other type of unsecured debt. Relief may be available through other, less costly, means. At Debt Free Associates, we focus on providing unsecured debt relief through negotiation with creditors and a robust plan to meet monthly payments that you can afford. This combination helps to successfully address credit card — or another form of unsecured debt — while avoiding the pitfall of debt consolidation: Turning unsecured debt into secured debt.

To learn more about the services that we provide, and how they help you avoid costly credit card debt consolidation strategies and other, less effective methods of unsecured debt relief, contact Debt Free Associates today for a free consultation.

What Is Unsecured Debt?

Unsecured debt is debt that is not tied to any collateral. Unlike secured debt, which can include car repossessions or home foreclosures, personal assets are not tied to an unsecured debt and creditors cannot repossess such items if payments go into default. Unfortunately, many debt consolidation loans can turn unsecured debt into secured debt, possibly putting borrowers' possessions at risk. This is not the case with our debt settlement services.

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What Is Secured Debt?

A secured debt is one in which funds are obtained by pledging one or more assets as collateral. These assets can include cars, homes, or other property. The loan is secured against this collateral by the creditor. If a secured debt goes into default, the creditor can take possession of these items to recoup their funds.

Turning Unsecured Debt into Secured Debt

Although it may seem attractive to consolidate all of your debts into a single monthly payment, this new, single monthly payment may be a secured debt. This means that, should you or your family encounter financial hardship, the creditor may be able to repossess your car, or take your home or other property. Because credit card debt is unsecured debt, relief through a consolidation loan can mean putting some of your most valuable possessions on the line. Both debt consolidation and bankruptcy typically offer only a temporary solution; and both can lead to even more serious financial circumstances. There is a very high chance that you could end up with even more debt through the high APR associated with debt consolidation loans!

This is why we recommend debt negotiation and settlement; because most credit card — and other unsecured debt consolidation loans — provide only temporary relief, can lead to even more debt, and require you to use the value of your home as collateral.

The Federal Trade Commission defines debt consolidation as a loan in which “you may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put your home as collateral.” To us, this spells trouble. Allow us to utilize the relationships that we have with creditors around the country to develop a monthly payment plan and help you negotiate your debt. Debt is stressful. However, the risk of losing your home, or other valuable possessions used as collateral, can only add to this stress.

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Contact Debt Free Associates Today to Learn More

If you have credit card debt, or another form of unsecured debt, and are considering relief through a consolidation loan, give us a moment of your time and we can help you determine if you — like many others considering debt consolidation — have a better option. To learn more about credit card debt consolidation alternatives, simply contact Debt Free Associates today for a free consultation.

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