How Many Types Of Debt Can You Consolidate?

How Many Types of Debt Can You Consolidate?

If you’re in debt, it’s easy to feel helpless and alone. In fact, though, you’re far from it - the average American has about $38,000 in personal debt, and that doesn’t even include debt from home mortgages. This can be stressful and difficult to figure out, especially when money’s tight and you have so many negative numbers to add up that you don’t even know where to begin.

Luckily, there are a lot of types of debt that you can consolidate to make payments easier on yourself. Here, we’re going to identify these debts so that you can make the process of paying off bills and loans as painless and smooth as possible. Read on to learn the difference between debts that can be consolidated and those that can’t.

Unsecured Debt (vs Secured Debt)

Generally, there are two main types of debt: secured and unsecured. Secured debt refers to those that are legally tied to an asset, such as a home or a car, that can be repossessed if you don’t pay the debt back in a timely manner. If you default on these loans, the creditor has the right to take the property and sell it as a means of getting the money to pay back the debt.

Secured debt can’t be consolidated with the exception of very few, very specific situations. Don’t expect to be able to consolidate it.

On the other hand, unsecured debt is based solely on your promise to pay it back. While it isn’t quite just an honor system- you can be fined, sued, and otherwise penalized if you don’t pay the debt- there are no assets that the creditor has the right to confiscate and sell. 

Unsecured debt is what can be consolidated.

Common Types of Unsecured Debt

The most common type of unsecured debt is credit card debt. If you have any of this, you can consolidate it with your other unsecured debt. This includes medical bills, which is good news if you have a sickness or injury that needs immediate care.

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