The Challenge to the IOU Calculator: Looking at Secured and Unsecured Debt

Debt comes in many different forms. There are two major categories of debt though and they would be secured and unsecured debt. The difference between these two forms of debt are significant. Unsecured debt would be any money owed not connected to collateral. Credit cards, lines of credit, and personal loans would be these types of debts. Secured debt would be something along the lines of a home mortgage or a car loan. Hence, they are deemed secured because an underlying asset can be seized in the event of a default. Unsecured debt is not connected to any assets. This is not to suggest though, there will be not ramifications if unsecured debt is defaulted upon.

When you default on unsecured debt. Your credit rating will be wrecked. You also might end up being sued so the lender can recover the debt owed. Those thinking they can get away from paying unsecured debt will be in for a rude awakening.

Those with secured debt such as mortgages also face the threat of foreclosure, which is certainly not a good scenario.

Often, problems with loans derive from high interest rates. When you run your unsecured or secured debt figures through The IOU Calculator and feel your interest rates are too high, you may wish to consider refinancing. This might be the best way to get out of a bad situation and avoid problems.

The IOU Calculator Reveals How to Deal with Debt Related to a Mortgage

Not very many people find it all that enjoyable to be mired in debt. Let us be honest. No one wishes to be buried in debt of any amount. However, financial problems can arise and people will end up in a serious debt situation.  They might take one look at the IOU calculator they have and start to panic. Some might even look for unique and novel ways out of their debt. In truth, there is nothing wrong whatsoever with looking for a way out of debt. However, using your mortgage as a means of getting out of debt might not always be the wisest strategy.

It is possible to weave short term small amounts of debt into a mortgage loan. This practice was actually more common than you would think prior to 2007. Today, there are more requirements for higher down payments due to new laws, rules and regulations. The higher down payments make structuring debt consolidation into a mortgage  much harder. And in all honesty, this may be deemed a good thing.  More debt weaved into the mortgage means more you have to pay on the mortgage.  Why create such hassles when there are other, easier ways to deal with debt consolidation such as taking out a home equity loan and using that instead?