When a debt is SECURED, it means
that a specific piece of property,
commonly referred to as collateral, is
attached to the debt to ensure that
you make your timely payments on
that debt.
This is a powerful weapon for
creditors and a great motivator for
you, the borrower, to make your
monthly payments on time each and
every month.
In the event that the debt is not paid
on time, as agreed in the credit
agreement, the creditor is entitled to
take or seize the specific piece of
property and hold it until you bring
that a specific piece of property,
commonly referred to as collateral, is
attached to the debt to ensure that
you make your timely payments on
that debt.
This is a powerful weapon for
creditors and a great motivator for
you, the borrower, to make your
monthly payments on time each and
every month.
In the event that the debt is not paid
on time, as agreed in the credit
agreement, the creditor is entitled to
take or seize the specific piece of
property and hold it until you bring
Secured Debt vs UnSecured Debt... KNOW the Difference
It is important to understand the difference between secured debt and unsecured debt if
you want to effectively repair your credit.
If you were to treat both secured debt and unsecured debt in the same way, you may walk
out to your driveway one morning and discover that your car is not where you last parked it.
Auto repossession is not an experience that anyone should have to go through.
Read the information on this page to gain a clear understanding of the differences between
secured debt and unsecured debt.
Understanding this will help you to decide which debts to attack first and which debts can
wait.
you want to effectively repair your credit.
If you were to treat both secured debt and unsecured debt in the same way, you may walk
out to your driveway one morning and discover that your car is not where you last parked it.
Auto repossession is not an experience that anyone should have to go through.
Read the information on this page to gain a clear understanding of the differences between
secured debt and unsecured debt.
Understanding this will help you to decide which debts to attack first and which debts can
wait.
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your account current or pay the balance in full. If neither of these options are met then the
creditor can sell the property to recover any loss.
UnSecured debt is in essence, extended credit based solely on “your word of honor”
(and in writing) that you will re-pay the debt as agreed in the contract with no collateral
attached.
To qualify for this type of extended credit depends on your past credit history (credit report)
and your credit score. The combinations of these two factors are a measure of how you
have handled your debts in the past.
There are other factors involved, but if you do not pass these two, there may not be a
reason for the creditor to continue with the credit approval process.
Because there is no collateral on UnSecured debt, creditors have nothing physical to ‘take’
or seize if you default on the loan. However, this does not mean that creditors will be
whining and stomping their feet. Creditors do have other means to extract the money that
you contractually and legally owe.
Creditors can sue you, get a judgment against you and try to collect on that judgment.
A creditor that is awarded a judgment on a SECURED or UnSecured debt can go after a
portion of your wages, your bank accounts, and, if the laws of your state allow, property
and/or real estate.
In addition, your CREDIT SCORE will take a tremendous hit for the worse.
Even though creditors offer special plans to ‘help’ you in your financial difficulties, it can still
have an adverse affect on your credit score and your ability to qualify for future credit and
future opportunities. However, if you feel that this is your last option… take it.
It is extremely important to understand the type of debt that you have. Secured or
UnSecured.
A SECURED debt will require extra care and attention as opposed to an UnSecured debt.
Only because Secured debt allows the creditor to seize the property you financed or
anything that you have put up as collateral.
If you need help, be sure to seek it.
creditor can sell the property to recover any loss.
UnSecured debt is in essence, extended credit based solely on “your word of honor”
(and in writing) that you will re-pay the debt as agreed in the contract with no collateral
attached.
To qualify for this type of extended credit depends on your past credit history (credit report)
and your credit score. The combinations of these two factors are a measure of how you
have handled your debts in the past.
There are other factors involved, but if you do not pass these two, there may not be a
reason for the creditor to continue with the credit approval process.
Because there is no collateral on UnSecured debt, creditors have nothing physical to ‘take’
or seize if you default on the loan. However, this does not mean that creditors will be
whining and stomping their feet. Creditors do have other means to extract the money that
you contractually and legally owe.
Creditors can sue you, get a judgment against you and try to collect on that judgment.
A creditor that is awarded a judgment on a SECURED or UnSecured debt can go after a
portion of your wages, your bank accounts, and, if the laws of your state allow, property
and/or real estate.
In addition, your CREDIT SCORE will take a tremendous hit for the worse.
Even though creditors offer special plans to ‘help’ you in your financial difficulties, it can still
have an adverse affect on your credit score and your ability to qualify for future credit and
future opportunities. However, if you feel that this is your last option… take it.
It is extremely important to understand the type of debt that you have. Secured or
UnSecured.
A SECURED debt will require extra care and attention as opposed to an UnSecured debt.
Only because Secured debt allows the creditor to seize the property you financed or
anything that you have put up as collateral.
If you need help, be sure to seek it.