Unsecured debt is debt that is not secured by some kind of collateral. Common types of unsecured debt include credit card debt and medical bills. Unsecured credit card debt typically has a higher interest rate than an unsecured card, because there’s no security deposit paid on it.
The Concern: Accumulating high-interest credit card balances and medical debt that outpace monthly income, making it difficult to stay afloat. Maybe you’ve missed some payments and have watched the debt balances continue to increase as a result. Or maybe you’ve only been making the minimum payment due, and, as a result, barely seeing any progress. Getting those debts fully paid off on your own might take you well over a decade.
The Debt Spiral: You want to avoid having to use your credit card and rack up more debt, but you find yourself having to continue using your card for living expenses such as gas and groceries. This is a debt spiral, and it’s a very financially unstable and difficult situation to be in.
How CCOA Can Help: Non-profit CCOA’s Certified Credit Counselors analyze your personal finances, create a budget with you, and can help create an action plan. Additionally, a structured Debt Management Plan (DMP) could be very helpful in becoming debt free. A DMP consolidates unsecured debts like credit cards and medical bills into one monthly payment to CCOA, which CCOA then sends to your various creditors. Interest rates can be significantly lowered and credit card late-fees and over-the-limit fees waived. Your savings in interest and fees can literally be thousands of dollars.
For a free, confidential credit counseling appointment, available by phone, online or in person (Bentonville, Fayetteville and Fort Smith), call (479) 521-8877 or make an appointment online for more information.
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