Debt consolidation entails using one large loan to pay off several smaller loans. Since medical bills are unsecured debt, they can be paid off through debt consolidation.
Unsecured Debt
Unsecured debt is not tied to an asset, while secured debt is linked to an asset such as a car or a house. If car payments or mortgage payments are neglected, a lender can repossess these items. Bills for medical care are unsecured because they are usually not tied to anything tangible.
Features
Taking a second mortgage or using a line of home equity credit can offer the resources needed to consolidate debt. As these options involve a secured loan, however, you could lose your home if you can't make these loan payments. Debt consolidation companies can offer a loan or a plan to help you save up a lump sum to offer creditors.
Costs
Debt consolidation companies usually charge about 10 percent of your consolidated monthly payment. Debtors can negotiate with creditors directly, though, so a third-party debt consolidation company isn't necessary.
Considerations
Effective September 27, 2010, the Federal Trade Commission banned upfront fees from debt consolidation companies to stop unscrupulous companies from taking advantage of desperate creditors.
0 comments:
Post a Comment