Unsecured debt is something we can all relate to. Whether it is medical bills, credit cards, student loans, or even streaming subscriptions, we all have something to pay. It is easy to fall behind, especially if a surprise comes along. Negotiating with creditors is not a desirable task, but in many cases, it is a necessary one.

What Is Unsecured Debt?

There are two types of debt: unsecured debt and secured debt. Unsecured debt needs no security, meaning it requires no collateral backing. It is based solely on a borrower's creditworthiness. This type of debt typically has higher interest rates than secured debt, which is backed by some kind of asset as collateral for the loan.

Unsecured debt can include anything from medical bills, student loans, and credit card balances. If the borrower enters default, the lender must take legal action to collect the remaining balance.

What Is Secured Debt?

Secured debt is backed by an asset for collateral. If the borrower goes into default, the lender can use the asset to pay off the remaining loan balance. Auto loans and mortgages are typical examples of secured debt — in these cases, the property being financed is the asset put up for collateral.

How to Negotiate with Creditors

Be Ready: Before talking to a creditor, have a 2–3 sentence summary prepared about your situation — keep drama out of it and simply provide the facts. Take Notes: Taking notes is crucial in keeping an accurate record. Ask Questions: Do not be afraid to get the specifics. Save Your Mail: Keep all official documentation for reference. Know Your Budget: Before talking to creditors, go through your finances and figure out what you can afford to pay. Get It in Writing: Once you reach an agreement, get it in writing — otherwise, the creditor can change the terms. Get Help: Financial advisors and bankruptcy attorneys routinely deal with creditors and can keep them from bullying you.

Is a Bankruptcy Attorney Right for Me?

Negotiating finances is not easy, and it certainly is not fun, but at Schottler Law, our experienced bankruptcy attorneys are ready to help you with all your financial needs and goals. We know how to handle creditors and collectors. If you are in the Chicago, IL area and struggling to pay off unsecured debt, contact us to get your free consultation.