Common Debts

Debt can be caused by any number of things, but falls into one of two categories: secured or unsecured debt.

Secured debt is backed by some type of collateral, such as property or an automobile. If you are unable to repay your debt, your lender can take possession of the item(s) you have put up as collateral to repay your debt.

Unsecured debt, on the other hand, is not tied to any collateral. The most common types of unsecured debt are credit card debt and medical debt. If you cannot repay unsecured debt, your credit report will have negative marks (ultimately reducing your credit score), and your lenders may sue you for the amount owed.

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