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What is the Definition of Secured Debt?

Secured debt is any loan that you take out that is secured by some form of collateral. In contrast, unsecured debt is not backed by any form of collateral. This video explains the difference using examples of the two types of debt.

The most common example of unsecured debt is a credit card. One example of a secured debt is when you borrow for your mortgage. If you fail to make your mortgage payments, the lender can come and foreclose on your property. When analyzing your debt situation, it is important to keep in mind that secured debt rates and terms are usually better than those for unsecured debt because there is less risk for the lender if you don’t make your payments.

If you are facing serious debt problems, bankruptcy is one option to consider for a fresh financial start. Contact the bankruptcy lawyers at Cutler & Associates, Ltd. by calling (847) 868-2265.

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