Types of Debt
Detroit Bankruptcy Attorney
As consumer, the idea of accumulating debt can be a daunting but necessary
part of building your credit. For some, accumulating debt can feel a bit
like you’re digging yourself further into a hole with no ladder
to climb out. The best resource to equip yourself with is the knowledge
to familiarize yourself with your debts. Below is a list of the most common
consumer debts most people have accumulated in their lives.
If you’re having trouble keeping current on your debt payments the
Law Offices of Marshall D Schultz can help you create smart, individually
designed, debt repayment options. Our
bankruptcy lawyers have 33 years of experience in this practice so even if
filing for bankruptcy isn’t your plan, we can help you resolve your financial concerns.
Get help today—Call us at 888.822.6730
A secured debt has a form of collateral attached to it. The most common
forms of secured debt are car loans and mortgages. What this means is,
if you stop paying your creditor for your car load or mortgage they could
take your car or house away as collateral for the loan. With a secured
debt, there is always something you risk losing if you fail to stay current
on your loan repayment.
Unsecured debts do not have any form of collateral. The most common unsecured
debt that consumers have is credit card debt. With unsecure debts there
is no property at risk when you default on your debt. This is why credit
card companies will forward your debt to collectors in order to get their
money back. Most unsecured debt tends to have higher interests rates due
to the lack of secured collateral.
This type of loan is typically a student loan or a mortgage loan. Usually
you are able to deduct any interest paid on your student or mortgage loan
on your taxes.
Fixed payment term
Debts that have fixed payment terms or fixed repayment dates can usually
be the easiest to manage because the amount you owe does not change from
month to month. An example of a fixed payment term would be a car payment.
Usually, car loans have a specific monthly cost and last an average of
Variable repayment period
Credit cards are the prime example of variable repayment period loans because
the amount you are required to pay monthly changes depending on how much
you owe. For example, if you only have a credit card debt of $500 your
minimum monthly payment may only be $15. In the next month if you spend
$1,500 on your credit card your minimum monthly payment could increase
significantly. This is where many consumers fall into trouble with their
finances. If you’re using your credit card to pay for everyday bills
and basic needs your monthly payments could quickly get away from you
and it may be difficult to stay on top of your finances. Our Detroit bankruptcy
attorneys are here to help you when you need it. We’ve seen hundreds
of cases like yours and we’re confident we can assist you in getting
your finances back on track before having to file for bankruptcy.
Variable interest rate debt
If your debt has a variable interest rate, this means that over the time
of the loan your interest rate my change. A common example of a variable
interest rate loan is a credit card. Many creditors will reel consumers
in with the promise of 18 months zero interest on their credit cards,
but then increase the interest rates way up to the high 20s after that
time period. For a consumer trying to manage their credit and finances,
variable interest rates could prove to be problematic as the variation
in interest rate could dramatically affect the cost of their minimum monthly payments.
Fixed interest rate debt
Fixed interest rates means the interest rate of your loan does not change
throughout the life of the loan. Some examples of fixed rate interest
loans are mortgage loans, car loans and banking loans. Often, your credit
score can determine if a fixed or variable interest rate is available to you.
If you’ve been struggling to manage your finances, our qualified
Detroit bankruptcy lawyers could help set you on the right track. We can
help you determine if bankruptcy is the right path for you.
Set yourself up for financial success—Contact us today.