Types of Debt
If you are looking at ways to become debt free, it is important that you get your finances in order. Although a Debt Management Plan, Trust Deed or IVA are ways to become debt free, there are those debts which cannot be included in your agreement.
Different Types of Debt:
Unsecured Debt: Unsecured debt is the most common cause of a debt problem but the good news is that unsecured debt can be included in your debt solution plan.
Types of unsecured debt include personal loans, credit cards, store cards and catalogue debt. Unsecured debt is usually lent at a higher interest rate as there is no security for the lender.
Secured Debt: This type of debt means that it is secured against your assets, most commonly your home. Failure to keep on these repayments means that your home is at risk of repossession and it will be sold in order to pay back the creditor.
Secured debt includes mortgages, hire purchase and secured loans.
Priority Debt: Priority debt means exactly that, they are priority debts which must be dealt with first and paid above all your other debts. Although making repayments on time is important for all debt, there will be more severe consequences if you fail to make keep up on your priority debt repayment.
Failure to pay the priority debts means that the creditors can take you to court and send bailiffs to your home to repossess goods. In extreme cases the court can repossess your home, declare you bankrupt or send you to prison.
Priority debt includes mortgage payments, rent payments, council tax, child support and utility suppliers such as electricity, water and gas.
For further information about the types of debt that One Advice can help with, please contact one of our debt advisors on 0800 048 1752.