America Debt Consolidation

Types Of Debt

Debt consolidation usually relates to unsecured debt. Unsecured debts refer to all debts that involve borrowing money (for example, through the use of a credit card, or by owing on past due utility bills) without the debtor having to put up any collateral. An example of a secured debt is a home mortgage where the house serves as collateral and can be taken away if the homeowner fails to maintain repayment.

There are nine types of unsecured debts that debt consolidation programs commonly cover:

Credit card debt is the result of unpaid past due balances on your credit card and/or an inability to make monthly payments as required.

Retail or department store debt crops up when you fail to pay the balance on multiple department-store credit cards.

Utility bill debt is a debt formed due to unpaid balances on utility bills. Utility bills include bills for services such as a telephone or cable connection, gas, electricity, heating, or the premium on homeowner’s insurance.

Student loan debt is incurred when the balance on a loan acquired for educational purposes is left unpaid.

Tax debt results from a failure to pay the taxes you owe to government offices.

Personal loan debt occurs when a borrower cannot repay a personal loan to a lender such as a bank or other financial institution.

A CD or magazine club debt is the unpaid balance owed to a subscription club.

Debt to collection agencies involves initial failure to pay debts owed, followed by past due bills be referred to a collection agency.