Credit Verus Debt

Secured and unsecured debt - what's the difference?

It's easy to just think that debt is just debt, but in reality, there are different types of loans, and it's important to know what which type you have.

You will need to understand the differences in order to be a good money manager, or, if the worse happens and you find yourself turning to credit or debt counseling, you'll need to understand how different types of debt can be handled. Let's take a look at two types of debt; secured and unsecured loans.

Secured debt is a loan that has something attached of value attached to it-this is called collateral. The most common examples are car loans and mortgages.

Collateral can be cash or the item (or items) that you borrowed in order to get. (For example, your car.)

With secured debt, if you fall behind on your payments, the collateral can be repossessed and the lender will sell it in order to collect the money that they are owed. But that doesn't always put you in the clear, in reality, even if the collateral has been repossessed or foreclosed on and sold, you may still remain liable for any balance remaining until the entire amount of the loan is paid off.

Additionally, with secured debt you cannot negotiate payments or any restructuring through credit counseling, and oftentimes you won't be able to discharge the debt by filing for bankruptcy.

On the other hand, unsecured debts act totally different. Most people associate unsecured debt with a credit card or a personal loan without collateral. But it can also be a commercial debt or a medical debt.

Essentially, this type of loan is structured around a good credit history and a personal promise to re-pay the loan. There is no collateral on this type of debt, and the creditor has no assurance ? other than your agreement to repay on pre-determined terms ? that they will get paid.

If you fall behind on one of these debts, a lender can send your account into collections and take legal action. More often, they will attempt to try and work out a reasonable debt settlement.

These debts and loans can be discharged, or restructured in bankruptcy or through credit counseling. The bankruptcy laws are changing.

Because of the lender's risk factor, you will generally pay a higher interest rate on these types of loans.

Most people have a mixture of both secured and unsecured debts, and both should be managed with the utmost care and concern. Many times, someone just starting to build their credit history will have to prove themselves with a few, small unsecured debt loans and re-payments in order to qualify to buy a home or a car (secured debt).

But overall, the most important thing is to treat each one as it is; a potential good mark that will improve your credit rating.

Article from http://www.nothing-but-info.com Greatest information place.

---

Types of Credit Cards

There are a whole variety of different types of credit... Read More

Dont Trade Your Future for Todays DooDads

"Easy Low Down Monthly Payment," "Buy Now Pay Later," "You... Read More

Which Business Credit Cards with Reward are the Best?

Thinking of applying for a credit card with a reward... Read More

Bad Credit Loans For Those Who Seek Alternatives for New or Old Car

You can still save money on a Bad Credit Loan... Read More

SuperCharged Secret 2, Credit Card Utopia

INTEREST BEWARE, THERE'S SAFETY IN NUMBERS!Note: The following is part... Read More

10 Signs You May Need Credit Counseling

Debt management programs can be of real help for people... Read More

The Art of Stoozing to Make Money from Credit Cards

Make Money from StoozingStoozing, this is a sophisticated method of... Read More

Clean Credit Report: Easily Raise Your Credit Score 100 points

Clean Credit Reports, your credit report contains information about where... Read More

Good vs. Bad Credit Debt

Do you know the difference between good and bad credit... Read More

Credit Establishment 101

There will come a day when you need credit. You... Read More

Legislators Ponder New Credit Protection Laws

Legislators in Washington, D.C. are considering several credit-related consumer protections... Read More

Credit Score: The Brightest Feather In Your Financial Cap

Credit scores are the most important aspect that determines your... Read More

Credit Card Security Advice

Which of the following is the biggest threat to your... Read More

Choosing A New Credit Card

1. Choosing A new credit cardThere are many reasons for... Read More

Credit Report ? Check Yours Regularly - and for Free

In the twenty-first century, there are few documents that have... Read More

Credit Card Companies Are Out for Your Money

You're probably thinking "Tell me something I don't know" but... Read More

Minimum Credit Card Payments to Rise

For years, major credit card companies have allowed cardholders to... Read More

10 Step Credit Repair Guide

The process of clearing credit can be laborious and frustrating,... Read More

Good Credit -- Essential for the Prospective Home Buyer

Credit is a funny thing. It can be a useful... Read More

Credit Repair Myths and Facts

There are no secrets to repairing your credit. Many shady... Read More

How Does a Creditor Determine Whether to Grant You Credit?

Credit 101How does a creditor determine whether to grant you... Read More

Credit Help For Renters And Others On The Horizon

Sue is a homeowner and pays her mortgage and other... Read More

Credit Card Benefits and Drawbacks

Credit cards have both benefits and drawbacks. It is wise... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before,... Read More

4 Steps to Creating Good Credit

As a consumer you've learned the importance of establishing a... Read More

Your Consumer Rights

If you have ever fallen behind on your debts you... Read More

Rebuild & Keep Good Credit Ratings by Understanding Your Credit Cards

Secured Credit Card is similar to a prepaid credit card... Read More

Credit Cards - Why Prepay?

With prepaid credit cards, you get the practicality of plastic... Read More

Saving Money with Credit Cards

Having a credit card is a wonderful convenience for those... Read More

Special Credit Information for Married Couples

If you are married, establish separate credit accounts.Try to finance... Read More

Understanding Your Rights Under The Equal Credit Opportunity Act

It wasn't all that long ago that lenders blatantly discriminated... Read More

What You Need To Know About Credit Cards

What is a credit card? A credit card is... Read More

Credit Card Is Adding The Silver Lining To Your Pocket

In the new millennium plastic money or credit cards has... Read More