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Debt Management

If you are in debt it can feel like you are struggling with a tide to be debt free. Each month you pay what you are able to off your debts only to find you get charged fees for being in debt which eat away at most of your payment. For many in debt becoming debt free in the near future is an impossible dream. But there are certain ways to help you become debt free; taking out a loan is just one of them. With a loan you can pay off all your existing debts and pay back a monthly sum that has been agreed upon meaning there are no extra charges and you know exactly what you will owe at every step of the way.

Loans tend to be classed as secured or unsecured, but what is the difference between these two types?

Debt ManagementThe main difference between secured and unsecured loans is in the name – a secured loan will be tied to an asset of yours meaning should you miss payments the asset will be taken away. The asset is usually a home and as such secured loans tend to be available to home owners only.

Unsecured loans are the most common form of loans supplied by banks and building societies. These tend to be available to customers with good credit scores as they want to make sure they receive payments. With unsecured loans it is still possible for the lender to reposes your home or other assets if you fail to make payments with a ‘court charging order’. These tend to be quite complicated so tend to be used as a last resort.

When taking out a loan it is important to have a realistic view of your finances, you need to make sure you have enough money to cover your regular outgoings such as mortgage or rent and utility bills. If you don’t leave yourself enough money to live off while becoming debt free you could rack up another dent very easily.

If you are looking for free, impartial advice in how to manage your debt, visit Debt Info Centre (DIC).  They can assist you view a world free from overwhelming debt problems.

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