Debt Relief FAQ's
Learn More About Debt Relief
I keep reading about unsecured versus secured debt, what’s the difference?
There are two types of debts secured and unsecured. Secured debts are debts in which your creditor has collateral or property attached too the type of debt you owe. A common example would be a car loan where your car serves as the collateral for the loan. If you choose not to pay these types of debts your creditor has a right to take or repossess the property. As such, secure debts are almost your highest priority.
Unsecured debts are debts with no collateral. Some examples of unsecured debts are credit cards, store & gas cards, medical bills and utility bills. It is usually hard for unsecured creditors to collect what is owed unless you voluntarily pay the creditor. Unsecured debt is type of debt that can be managed down and ultimately paid off through a debt management plan (DMP).
How will a debt management plan help me?
A debt management plan is a proven way to get you out of debt. It allows you to make a single monthly payment that is distributed to your creditors. This eliminates the need to make individual payments to each of your creditors. Many of the creditors who participate in the plan will allow you to reduce your monthly payment and, after you establish a payment history, may reduce or eliminate interest and late charges, and harassing collection calls should stop. That way, more of your payment goes to reducing your debt, getting you out of debt faster. A debt management plan also has no impact, positive or negative, on your credit rating.
How do I know which program is a good fit for my situation?
There are many factors that go into determining the right product for an individual. Much of this depends on the amount of debt, your ability to pay those debts, your creditor mix and even your lifestyle. Specific conditions can favor a one debt product, making it a better fit for an individual’s situation. For example, many people choose to enroll in a debt management plan to help them get out of debt. To get the most benefit out of this particular plan, most consumers should have at least $2,500 in unsecured debt and a minimum of two active credit accounts. Conversely, you may be a candidate for debt settlement if the amount of debt you owe is in excess of $7,500 and you are falling behind and/or unable to make your minimum monthly payment for your unsecured debt payments. If you are really unsure, you can get a CareOne Credit professional to assist you in evaluating your options.