Unsecured Debt

When understanding debt, the most essential thing to know is that there are two types of consumer debt, secured and unsecured.

What is unsecured debt?

Unsecured debt is the easiest type of debt to obtain. The most common unsecured debts are credit cards and medical bills. This type of debt is not tied to property or assets and you will not lose your property if you cannot pay. In the worst possible scenarios, your credit report will have negative marks and a lower score, and individual lenders will sue you for the amount owed.

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How is unsecured debt acquired?

Overspending with credit cards is the leading cause of uncollected, unsecured debt in America. The ‘bigger is better’ mentality keeps spending patterns on the rise and debt rate growing exponentially. Until proven irresponsible, anyone can obtain a variety of credit.

Most people are offered a variety of credit card options every day, from email and traditional mail methods to booths set up at schools and malls. The message is clear: credit is there for the taking and it will be offered to you.

What is the best approach to managing secured and unsecured debt?

The best approach to secured and unsecured debt is pay your bills on time. In the realms of debt, secured debt can have high repercussions. Overcoming debt takes discipline, organization, honesty, communication and significant changes to your spending habits and lifestyle. 

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