Types of Debt Consolidation
The creditor is the natural or legal person to whom a debtor owes money for any reason. It may be a bank, financial, a furniture store or an ordinary person. The debts may be:
Assured ( ‘Secure’)
Secured debts ( ‘Secure’) are those where property securing the payment, so if the debt is not paid the creditor can go against the property to obtain payment of its debt. Repossession or you can do so through a process of forfeiture, or forcing the sale of the property.
The most common secured debts are:
- Mortgages: Debt secured by houses, buildings, land or farms. Failure to pay the monthly agreed as the creditor (usually the bank) can, through a court proceeding, enforce that guarantee. In this case the bank or the secured creditor will force the property to be sold at public auction to recover the debt.
- Auto Loans. Failure to comply with the agreed monthly payment the bank can stand the car with or without a court order.
- Financing of home furnishings, household equipment or home business, if you meet certain requirements established by law, which must be specified in the contract of sale. Failure to make agreed payments the creditor can sit the property, with or without a court order.
- Some credit card purchases made after January 1998, if so indicated in the contract of the credit card.
- Personal loans with collateral or business such as cash deposits or as in the case of savings and credit cooperatives (credit unions) in shares ( “shares”).
Unsecured
In general all other debts are uninsured ( “Unsecured”), have no collateral, for example, to obtain personal loans from banks, financial institutions or individuals, and credit cards. Failure to pay these debts the creditor is entitled to sue and be paid, through the court, could get a seizure of property allowed to charge. Some unsecured debts out of bankruptcy because the law says they have priority in the recovery. Example of priority debts are debts for certain taxes ( “Taxes”) that we have with the government, and alimony. Priority debts must be paid first to the other unsecured debts. These debts are not a priority in a Chapter 7 relevance and must be paid in the payment plan in Chapter 13.
The new bankruptcy law provides for changes in how maintenance can be paid in bankruptcy so it is recommended to get legal advice.
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Debt settlement appears to be seen as a true strategy for people stuck with debt. Over the past year I have been following the market rather closely and it is quite difficult to tell what you are getting for your settlement agreement. I know there are some debt settlement companies out there that offer great service and the debt settlement customers honestly benefit, but I am also aware there are tons of debt service providers on the web that are only focused on collecting customer payments and signing up new customers. I am sure this is why there is so much new govt regulation in the debt consolidation industry. My best friend utilized a debt settlement company and is very happy satisfied with the results.
Consulting insurance business must pay attention to save dollars.
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