Go to Christian Bankruptcy Attorney

Go to Bankruptcy FAQ 

WHAT IS A SECURED DEBT? 


Definition / Defined:

A "Secured Debt" is a debt backed by a lien.

A lien may be a voluntary lien (such as a mortgage, trust deed, or other pledge of collateral).  A lien may be an involuntary lien (examples: court judgment lien  [abstract of judgment], or tax lien).

A secured debt is a debt by which the creditor / lender has the right to pursue specific pledged property upon default of an obligation.

 It is a debt that is backed or secured by collateral in order to reduce the risk associated with lending. 

Because there is property or an asset backing the debt, the lender can often loan money at a lower rate than a higher risk unsecured debt money loan, e.g. credit card.

 A common example of a secured debt would be a mortgage (or deed of trust) where your house is considered collateral towards the debt. If you default on repayment, the bank may foreclose, sell your house, and use the sales proceeds to pay back the debt.

Car and vehicle loan installment debts are typically secured debts.


2011
 
Disclaimer

Go to Bankruptcy FAQ

Go to Christian Bankruptcy Attorney