There are certain types of debt that are considered Secured Debt. These debts can not be consolidated as they are a different type of loan that has
different restrictions to them. These typically have collateral attached to
them in the form of a lien. A lien is defined as a claim that is monetary in nature
against a property to be satisfied before full ownership actually happens.
For example, one is a loan on your house in the form of a mortgage. The bank or
mortgage company actually owns the house until you have satisfied the conditions
of the lien (or paid the mortgage off) This prevents the bank/mortgage company
from losing out if you can't afford the cost of the house payments.
Under most circumstance, secured debts are not negotiable.
The only way to satisfy the lender is to obviously pay it off entirely. This
could however be done by borrowing money from another lender and use it to pay
off any secured loan. Or if you don't pay it off, the bank can re-posses your
house (where they will go and sell it again) thus that will take care of the paying
back of the bank in most cases. If they re-posses your house and the value
of it has dropped considerably and they can't sell it for what you still owe,
there maybe some other factors that come into play.
Some other examples
of secured debts/loans are:
- Mortgages (1st, 2nd and HELCO)
-
Car Loans
- Loans from a bank that are tied to your house or car or other
valuables used as collateral.
- IRS tax liens are also usually tied
to a larger asset or maybe set up and established as a wage garnishment.
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