Secured Debt

When understanding debt, the most essential thing to know is that there are two types of consumer debt, secured and unsecured.

What is secured debt?

You take on a secured debt when you offer collateral for a loan or another form of debt. This collateral is generally a home or car and serves as your promise that you will pay back the debt. If for some reason you are unable to make payments, the lender can assume possession of your property as a payment. Secured debts usually have structured payment amounts and terms.  If you cannot repay this debt you will lose your property.  If you file bankruptcy against your unpaid secured debt your property will be included in the bankruptcy.  When applying for a secured debt the best thing to remember is to repay this debt.

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How is secured debt acquired?

Secured debt is easy to acquire, from mortgages to loans; almost anyone can obtain a secured debt on their property. In most cases, you wouldn’t need to obtain a secured debt unless you were already experiencing financial issues. Attaining more money can sound like an easy solution, but the fact remains that this debt must be paid back or the repercussions can be overwhelming. Losing your property and filing for bankruptcy can carry very high costs. Think twice before signing over your property and making promises that may be even more challenging to keep than your current broken agreements.

What is the best approach to managing secured and unsecured debt?

The best approach to secured and unsecured debt is pay your bills on time. In the realms of debt, secured debt can have high repercussions. Overcoming debt takes discipline, organization, honesty, communication and significant changes to your spending habits and lifestyle. 

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