The term un-secured is basically used for credit who is issuing such kind of loans which do not have any mortgage or security against those loans. Credit cards, personal loans, medical loans are all unsecured debts. The only problem for these unsecured loans is that these are always very expensive and massive for every one.
These loans are easy to take and easy to use but not easy to pay back. The repayments of unsecured loans are strange. These unsecured debts do not have any fixed plan of repayment due to which the outstanding amount varies from time to time. Whenever you will pay minimum amount, it will be straight away adjusted in markups and some other charges. An ordinary consumer continously pays minimum amounts for many years but the loan still stands. This is a stage when everyone thinks about elimination of debts at once.
When a debt becomes massive, it leads towards bankruptcy. Bankruptcy is the easiest way to eliminate all your debts at once. But if you want to maintain your credit score for better financial future then bankruptcy is not advisable.
The debt settlement programs were introduced to avoid bankruptcy and to give a relief to the consumers. The government has also injected billions of dollars in shape of stimulus money in order to give relief to the consumer. The Governments are damn serious to control the economic recession which is the main reason of bankruptcy.
Many debt settlement companies are helping people to get out of their debts in this period of recession. Debt settlement companies are negotiating with the financial institutions on consumer's behalf to eliminate debts.
The negotiation is important in debt relief. Negotiation is a process to raise an offer for elimination of total outstanding amount. If you have some extra amount to clear your debts in lump sum, the negotiation will be for clearance of loan at once by paying certain amount. The debt settlement company will offer financial institution to take certain amount in lump sum and clear debt. But if you do not have much amount to pay in lump sum then you have another option in negotiations to get an easy install plan for two or three years. The minimum amount will be changed in to installments.