Tag: Chris Scully

Debt Settlement and Unsecured Debt

Debt settlement, also called debt negotiation, is a method of debt management in which an agreement is made with a creditor to accept some amount less than the full balance as payment in full on a debt.

Debt settlement is often used to eliminate unsecured debt, which is a debt that is not tied to any property.

The most common type of unsecured debt is revolving credit card debt. Credit cards authorize the person named on the card to charge (become financially liable for) goods and services. With revolving credit, you can make charges up to a pre-established credit -limit.- As the money is repaid, it can be borrowed again.

Debts that are tied to property such as a car, refrigerator, house or vacant land, are secured debts. When you default on a secured debt, the loan company can take possession of your property and sell it. The money received from the sale is used to pay off the balance of the loan.

The most common form of secured debt in real estate is the lien. A lean is a legal claim that gives the creditor the right to take and hold or sell the debtor’s property. Liens are removed when the debt is settled.

The procedures for securing other types of personal property debt are contained in the Uniform Commercial Code (UCC). This statue includes forms and public filing documents that can be used to establish the creditor’s interest in the property.

Secured debts reduce the financial risk of the creditor (the person or company that has extended the credit and to whom the money is owed). This is why secured loans typically have lower interest rates and better financing terms than unsecured debt.

People who experience a long-term loss of income for any reason, are good candidates for debt settlement on unsecured loans and revolving credit card debt. It can be a very beneficial solution to resolving debt problems

Chris Scully is a consumer advocate for ethical debt settlement and credit repair practices, personal finance expert and blogger (), and author of the book The Debt Survival Kit. You can contact Chris at .

MyMoneyMess.com