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Debt Settlement FAQ's What is the difference between unsecured debt and secured debt?
Debt Settlement FAQ's What is the difference between unsecured debt and secured debt?
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| What is the difference between unsecured debt and secured debt? |
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Question 15- What is the difference between unsecured debt and secured debt? Answer: An unsecured debt generally arises out of a contract entered into with a creditor that enables you to obtain goods and services on credit in exchange for your promise to repay the creditor. Credit cards, medical loans and personal loans are the most common types of unsecured debts. If you are delinquent with this type of debt the only recourse the lender has is legal action. A secured debt is a loan where the creditor retains a security interest in real or personal property such as a house or an automobile. If you fall behind on payments with this type of debt the lender has the ability to repossess the property in order to mitigate their damages. If your property is repossessed and sold you remain liable for any deficiency balance that remains after the sale. Certain exceptions apply depending on the nature of the security interest. |
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