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Consumer Debt Relief – Proven Tactics to Eliminate Unsecured Debt

When we talk about debt relief, so many methods and strategies can be found in the market. For those who are looking at ways to eliminate their debts, a little insight to their debt portfolio and the collateral backing them could prove to be very useful. This article tries to point out the ways in which you could use this understanding to get rid of your own debts.

Well, understanding your debt portfolio and the specific charges they create over your assets is an inside-out strategy. Rather than looking at market based strategies, let us formulate our own strategy to eliminate debt. This is how it works.

First, we need to analyze our debt portfolio. Find your loan agreements and classify your loans under separate categories. For instance, we can segregate them according to the nature of the advance i.e. whether they are short term debts, credit card debts, long term debts and mortgage loans. After the classification, we need to classify these debts again under unsecured debts and secured debts. A further classification is needed and that would be under the headings of exempt debts and non exempt debts according to the Bankruptcy Code. The whole purpose of this exercise is to understand the risk these debts pose to the borrower. For instance, it is advisable not to default on a loan which is secured, and has a charge over your non exempt assets. These loans need to be settled according to the repayment plan whenever possible. If the debt is unsecured and is an exempt debt, we do not need to worry too much about it. In any event, defaulting on a loan is never recommended and this article only points out a strategy which could lessen the impact on your financial position!

Once we have picked the unsecured debts from our portfolio, we can apply some pressure on the creditors by sending a warning signal to them-skip paying a couple of installments! This will put them in high alert and they will start finding ways to make you settle the debt. As an unsecured debt is generally difficult to recover, the only realistic way for them to recover it is through your payments. This will create your bargaining power which you need to use wisely.

Therefore, this method will help you to obtain a good discount on the debt, negotiate on a better interest rate and gain other concessions which you would not be able to obtain otherwise.

Debt settlement is a legitimate alternative to bankruptcy and should only be considered by consumers who have at least $10k in unsecured debt and are experiencing a financial hardship. To compare debt settlement companies it would be wise to visit a free debt relief network that will provide a free debt consultation to determine which option is best for you.

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