Getting deep in debt can be a hassle in the long run, especially when it comes to your credit rating and lifestyle. Fortunately, there are several ways you can take to become debt-free. Today we will discuss two of these options: debt settlement and debt consolidation.
At one point, we’ve all been there: encountering financial difficulty because of illness or injury. Being sick or getting injured forces an individual to take time off from work. For people who get paid by the hour, this is bad news because it undercuts their paycheck at the end of each month. Even for people who have medical insurance and company perks to go on paid medical leaves, the lost productivity can still affect their professional standings.
In modern finance, there are two main types of debt: secured and unsecured. Secured debt refers to debts backed or secured by collateral assets. If the borrower defaults on a secured debt, the lender can repossess the collateral, sell it, and use the proceeds to complete the payment. Because secured debts are tied to an asset, the lender has a better chance of getting repaid for the debt should the borrower fall behind on the payment. Examples of secured debt are mortgages, which are secured by real estate, and car loans, which are secured by vehicles.
According to a recent study, the total amount of debt held by the public in the United States was estimated to be around 14.3 trillion dollars. Credit card debt alone was estimated to be around 747 billion dollars, and that's not even counting medical bills, personal loans, and other types of debt. To put this into better perspective, the average household owes somewhere around 130,000 dollars in total debt.
As common as debt is in American daily life, you’ll be surprised to know that a lot of people who’ve borrowed money or deferred payments aren’t aware of the nuances surrounding their situation. In every debt agreement we enter, it’s important to know the full implications of the stipulated interest rates, penalties and sanctions involved with delinquency. Not having the right information can send you down a path of bad decisions that can worsen your debt situation.
According to the Employee Benefit Research Institute, debt among American families headed by someone 55 or older had increased from 53.8% in 1992 to 65.4% in 2013. Retirees have also reported that they incurred the following kinds of debt: credit card (27% of retirees), mortgage (23%), home equity line or credit (17%), or car loans (17%).