Unsecured Debt Help Program

Paying off your unsecured debt is tasking, but not impossible. You can get out of unsecured debt by devising an actionable debt payment plan or enrolling for an unsecured debt help program. This guide would enlighten you on how to pay your debts, and equip you with the necessary data. Read more…

What Is an Unsecured Loan?

The term “unsecured” refers to the high risk of the loan for the credit card issuer, as unsecured loans do not require an underlying asset from the borrower. In cases of loan default, the lender is forced to sue the borrower for repayment, since there’s no asset to hold onto.

Even though, borrowers of unsecured loans are said to “have nothing to lose “, they could be forced to give up their assets by a court order.

Defaulting on an unsecured loan isn’t a good idea ’cause it deforms the credit score of the borrower and might result in the loss of precious properties if the creditor wins in court.

Secured vs Unsecured Debt

I get daily questions from random people as regards, the type of loan that suits them best. Though there’s no general answer, I try my best to proffer a personalized solution for each person.

My answer depends on the urgency of the situation, the amount needed, the credit score, monthly income, living conditions, security of work, and most importantly, type of debt, the reason for applying for a loan.

Let’s say you need a large amount of money at a reduced rate and you’ve got an asset to serve as a backup for the lender, go for a secured loan.

On the other hand, an unsecured loan is for people with urgent needs, high credit score, and no asset that meets the requirements of secured loan. All you need to qualify for a secured loan is a good credit score and word of mouth
Secured debt gives you better terms while an unsecured loan is all shades of difficulty.

Unsecured debt examples

Credit Card Debt

As the name implies, credit card debt is a debt incurred by the use of an unsecured credit card for purchases with the aim of repaying in due time. American credit card debt relief to $1 trillion dollars at the beginning of 2017.

Personal Loans

Personal loans aka signature loans are disbursed for various purposes, such as home repair, vacation or business startups. The creditor can be a bank, online creditor or credit union.

Business Loans

Most businesses, even the billion-dollar companies have once or twice depended on a business loan to resuscitate their business. When an urgent need arises, businesses turn to the unsecured source of credit for urgent funds.

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Peer to Peer Loans

Have you ever asked a family member or friend for some funds for a specific amount of time? That’s a good example of peer to peer loans. It involves two close individuals, but there are sites that match borrowers with lenders, for instance, prosper.com and lending club.

Private Student Loans

Like personal loans, private loans are often funded by banks or private creditors and their requirements largely depends on your credit history.

Medical Debt

No one intends to fall ill, but the reality is rather unfortunate. 25% of Americans reportedly acknowledged that their family member is struggling to pay off your medical debt.

Apartment Leases

Home rent is not considered debt, but reaching a compromise with your landlord via word of mouth makes you indebted to your landlord or landlady. Though your assets are secured, you could be evicted if you default on the home terms and conditions.

Cellphone and Utility Bills, unpaid rents, unpaid bills are considered unsecured debts. Late payments could result in disconnection of your phone or utilities. Again, these cellphone or utility companies have no right to your assets.

Auto Repossession Overage Balances

Like mortgage loans, an auto loan can repossess your car, if you default on the loan payment. In case the car has lost its value, the difference in value aka auto repossession overage balance is your burden to bear.

What is an unsecured debt help program?

An unsecured debt help program is a program designed to help borrowers pay off their debts, such as debt consolidation programs, federal loan forgiveness, and other repayment programs. If you’re having a hard time deciding what programs to apply for, see a debt counselor.

How to get out of unsecured debt

You can’t get out of debt with the same mentality that made you a debtor. Regardless of the amount of debt you owe, to get out of debt, you must be willing to change your lifestyle a bit.

The steps below lead to freedom from debt:

Be real with yourself: How much debt do you have?

Oftentimes, we ignore the problem, to relieve ourselves of a bad situation, but such an attitude only makes things worse. If you can’t face your debt and fight it, you can’t get out of debt.

Get your credit report from Transunion or Experian. Then, add up every debt you owe, including your unsecured credit card debt help, student loan, car loans, personal loans, and most commonly secured credit card offers.

After you’ve got your figures right, you can proceed to the next phase, which is repenting from the attitudes that brought you into debt.

Repent from the attitudes that got you into debt

If you don’t change your attitudes, you’d still become a debtor after paying off your current debts. Bad spending habits aren’t curbed by winning a lottery or earning more. The world is filled with poor guys, who were once rich.

Though there are different reasons for being in debt, most people got into debt because of their reckless spending habits. If you find yourself in this category, it’s high time you changed your lifestyle.

Earn more than you spend

Whether you want to pay off your debt or stay out of debt, earning enough dough is key to achieving your financial goals.

Do not forget that you have to keep surviving while paying off your debts.

Use your current situation as a motivation to increase your income, so you’d be better financially when your debts are gone.

Why earning more is key to financial success

Cutting costs works, but it isn’t enough to sustain a debt-free life. To become totally free of future debt, you must earn more.
For instance, It would take a person with a $10,000 yearly income and $70,000 student loan debt 20 years to pay off his loan, assuming he sticks to the minimum payment. My best advice to such dude is to earn more ’cause he would incur more debt before paying his current debt, if care is not taken.
Different individuals have different amounts of debt, but earning more remains the ultimate factor.
Follow these steps below to earn more:

Trade stuff

If you used to be the type that buys unnecessary things, start selling those stuff in order to help pay off debt. Gather the things you no longer use and sell them on eBay, Craiglist, or in your neighborhood.
Selling stuff has its pros and cons. Though your money would increase, selling some items isn’t a sustainable means of making more money. With time, you’d run out of things to sell.

Hustle harder

If you were caught by an unsecured bad credit loan nothing you will need to work hard to and probably debt consolidation help. It’s either you work overtime or get a side hustle. Though getting a side hustle is not easy, it’s worth the effort. Some side hustles are easier while others are damn hard. The best way to combine your current job with a side hustle is to find a work that you enjoy doing. That way, you’d be less bored and more active.

Be smart

If Henry Ford hadn’t devised a better way of producing cars, he wouldn’t be as successful as he turned out to be and the world of production would still be slow. If your boss notices your efficiency, you’d be promoted. However, if your job doesn’t pay off after doing your best, it’s high time you switched companies, perhaps a company that offers help with student loan debt or help you with current tuition fees. That’s easy to do if your work record is as good as you think.

Go for credit counseling

Admitting “I need help getting out of debt” is hard, Credit counselors aka debt counselors have the experience, skills, and tools to devise an actionable debt management plan for you. Asides DMP creation, credit counselors can help you reach a compromise with your creditors to reduce your interest rate, extend your duration of payment or cancel some parts of your debt.

SUMMARY

Paying off your unsecured debt is tasking, but not impossible.

You can’t get out of debt with the same mentality that made you a debtor. Regardless of the amount of debt you owe, to get out of debt, you must be willing your change your lifestyle a bit.

Oftentimes, we ignore the problem, to relieve ourselves of a bad situation, but such an attitude only makes things worse. If you can’t face your debt and fight it, you can’t get out of debt.

The world is filled with poor guys, who were once rich.

Cutting costs works, but it isn’t enough to sustain a debt-free life. To become totally free of future debt, you must earn more.