When it comes to debts, there are two kinds: secured and unsecured debt. Before you borrow money, it’s important to know the difference and being well informed also helps when it comes to prioritizing your debts, paying them off and keeping your assets safe.
A secured debt is a loan that is tied to an asset, giving the lender security for the debt. Should you fall behind on your loan repayments, they may have the right to take your asset. If this happens, the lender can sell your asset and if the price for the asset happens to be less than what you owe, the lender may also have the right to peruse you for the difference.
Some examples of this are mortgage and car loans. Your mortgage is secured by your home and your car loan is secured by your car.
An unsecured loan simply means the debt is not tied to any asset and the lender has no right to your collateral if you fall behind on your repayments. If the lender needs to pursue you for the debt, they may hire a debt collector to chase you up, take you to court and attempt to sue you for the money, ask the court to garnish your wages or put a lien on your assets until the debt has been repaid. This may also reflect on your credit score.
At Bankruptcy Debt Help, we are bankruptcy specialists and understand the different elements that can cause someone to get into debt. We pride ourselves on having the knowledge, tools and right advice to assist everyday people who have fallen on hard times and need a little helping hand to get back on their feet.
Don’t hesitate to contact our team today to find out what we can do to help you.