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Is the FHAP for me?
When people fall victim to financial problems, the two most
common schools of thought are consolidation loans and
bankruptcy. Few have the foresight or education to
understand that each of these options are little more than temporary solutions
which may bring their own, more serious complications.
After getting a debt consolidation loan, many people find themselves in deeper
debt and in more financial trouble. Having all your debts combined into one
payment may sound attractive, consolidation loans will not change the amount of
money you owe and you may be just turning unsecured debt into secured debt. Many
people learn, too late, they can not borrow their way out of debt.
There are two types of consolidation loans, secured and
unsecured loans.
A secured loan is when "the borrower" promises to give "the lender" property
(collateral). If "the borrower" can not pay the loan, risk forfeiting the
collateral. Using your home or automobile for collateral to obtain a loan can be
a costly mistake.
If a hardship finds you and your family, and you are unable to make your loan
payments, the bank can take away your home or car. Consumers who turn to loans
for help sometimes encounter additional problems.
For example, debt consolidation loans may have high hidden costs and may require
your home as collateral. An unscrupulous company may misrepresent the terms of
such loan agreements and borrowers may not even be aware that they may lose
their home. No one should feel they have to risk everything they own to settle
debts.
An
unsecured loan is not secured by collateral
that creditors could repossess, such as a house or automobile, if payments are
not made.
For example,
unsecured loans may include money you borrowed
from a finance company where you did not sign a security agreement, money
borrowed from friends or relatives, as well as some education loans, credit and
charge cards, legal, medical, or accounting bills. Unsecured loans also may have
high interest rates and can charge as much as a 30% interest rate.
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