This is a very common question and one that is easily explained. In almost all cases, secured debts are not negotiable and in almost all cases, unsecured debts are. That’s the short answer, but here’s the difference.
All debts are either secured or unsecured. A secured debt is usually tied to an asset, like a car for a car loan or a house for a mortgage. If at any time you stop making payments, the lender (or lien holder) can repossess your car or foreclose on your house. Secured is the same as collateralized and they just take the collateral if you can’t pay the debt.
An unsecured debt is not tied to any asset and includes most credit cards, bills for medical care, signature loans, private student loans, and debts for other types of services such as cell phone service and other utilities.
Some examples of unsecured debt that are not negotiable are: government backed student loans, taxes (current or past due) and other government loans. If you owe money to the IRS, you are most likely going to get a payment plan (best case) unless you file for bankruptcy.
One example of a secured debt that might actually be negotiable is your home mortgage. Over the past year, we have had tremendous success with home loan modifications. In most cases, we were able to negotiate a new lower payment for our clients significantly improving their ability to pay and therefore avoiding foreclosure.
If your monthly payments (house, card, food, credit cards, etc.) are too high and you can’t afford them, you need to make some changes. First thing to do is set some priorities and decide on what you can afford. Is it credit card debt that is killing you or is your mortgage just too high no matter what? If you can afford your house and it’s just the credit cards that have you down, debt settlement could be your answer. If you had an adjustable rate on your home and the payments have sky-rocketed, you might need to address that issue first with a loan modification. One of the expert financial advisors at First Rate Debt Solutions can help you sort through your debt and give you guidance that would best suit your particular situation.
We offer free consultations with no obligation. What have you got to lose besides your debt?
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