Secured Debt

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A debt that is secured by either personal or real property

A secured debt is collateralized by something of value which exceeds or is equal to the value of the debt.

Examples Of Secured Debt

A secured debt is a car loan in which the creditor may repossess the vehicle upon the borrower’s default on the loan.

A secured home mortgage in which the home’s equity secures the loan, and upon the borrower’s default, may result in foreclosure.

Unsecured Debt

An unsecured debt leaves the creditor only with the debtor’s promise to pay. There is no collateral upon which to guarantee the loan. A typical example of unsecured debt is a credit card.

Most laws governing secured loans in the sale and purchase of products are governed under Article 9 of the Uniform Commercial Code or your state’s equivalent of this federal law.

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