Drowning in debt? Don’t take a secured loan as your life raft

: Chris Lee Law Firm

  Filed under: Loans

Many people drowning in debt and defaulted credit payments look to every possible option to help pay their bills. Shifting balances between cards, opening new cards with zero interest offers and applying for additional or consolidation loans, are just some of the ways people try to reduce their debt.

The stormy seas

The lure of shifting balances between cards, applying for loans or consolidating debt can be tempting for people who fail to see any other way out of their financial troubles. One of the worst decisions a person drowning in debt can make, is taking on more credit and ending up in more debt. One common example is applying for and accepting a secured personal loan. A secured loan offers you money in exchange for some of your property (ie. car or house) to be used as collateral. If a payment is missed, or the account becomes delinquent, your property is then allowed to be repossessed, garnished or put into foreclosure. Common types of secured loans are mortgage loans, title loans, tax refund and payday loans.

Debt relief life raft

Reducing and eliminating your debt does not require more credit or even more money. The best way to reduce your credit debt is to create a budget. Examine your monthly finances and set yourself spending limits. It is important to keep track of your monthly spending and you will be able to find many areas of non-essential expenses. Eliminate these extra, non-essential, monthly living expenses and cut back on anything you don’t really need. Contact your creditors to negotiate repayment terms and lower interest rates. Most importantly, after paying your essential living costs, use as much of your remaining income to make payments on your debts. If your income isn’t sufficient to cover your monthly living expenses, consider changing to a higher paying, or even second job. Getting out of debt can be as easy is finding a life raft.

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