What’s the difference between a secured debt and an unsecured debt?
A secured debt is one where the creditor takes personal or real property as collateral. A creditor whose debt is secured has a right to take property to satisfy a debt in default. A secured debt (like a mortgage on a house or a car loan) gives the creditor the right to take back the security (car, house, furniture, etc.) if you fail to make your payments. A debt is unsecured if you have simply promised to pay a creditor a sum of money at a particular time, and you have not put up any real or personal property as collateral. An unsecured debt (like a credit card, medical bill, utility bill, rent, etc.) does not give the creditor the right to repossess any property you have. All the creditor can do is to sue you for the money it is owed.
