Unsecured debts are not associated with any asset, such as an automobile or home. The most common forms of unsecured debts are credit card debt, medical debt and personal loans. These debts create fewer problems for customers because you have no fear of losing a valuable asset.
If you are unable to pay an unsecured loan, your lender will not have any claim on your property. To pay off unsecured debts, you can get the advantage of debt-relief options, including debt settlement, debt consolidation and debt management. These options will help you to clear the debt at a faster rate. Here are some excellent options for you to deal with unsecured loans.
Debt Relief Orders (DROs)
A debt relief order is a cheap substitute for bankruptcy. There is no need to pay anything to your creditors for almost 12 months. After this period, your debt can be written off. It is a formal solution for debt that will not force you to appear in court.
Before applying for a DRO, you have to ensure if it is the best solution for your debt issues. You will need Debt Relief Order information and help to get necessary forms. An eligible candidate can repay his/her debt in installments.
Prepare a Payment Plan
If you want to pay off unsecured debt, prepare your payment plan. Feel free to call your lenders and creditors for a decrease in interest rate. After this settlement, you have to send monthly payments to your creditors without any delay.
Credit Counseling for Consumers
Feel free to take the services of a credit counseling agency. They can work within your budget to prepare an affordable payment plan for unsecured debts. A counseling agency may put you on a suitable DMP (debt management plan). This plan will include a minimum payment for every creditor with a lower rate of interest.
Credit counseling may take almost 3 to 5 years. During this period, you are not allowed to use credit cards. Remember, your credit report will be updated to display a credit counseling status. There is nothing to worry because it will not affect your credit score.
Successful debt settlement can decrease your debt by almost 40% - 60%. A debt settlement firm will need a monthly fee for its services. You can negotiate this fee to pay a lump sum amount. After reaching a settlement sum, your debt settlement firm will use the money you are sending for settlement.
Settlement firm needs your cooperation to increase the chances of success. Your debt collectors and creditors can deny the settlement offers. In this situation, you will not get any refund.
This process will combine your debts into a single payment. Some programs involve a consolidation loan that you will use for the payment of an unsecured debt. To use this option, you must have an impressive credit score because you will need a new debt. This program will operate like consumer credit counseling for monthly payments.