Debt is defined as owing money to a person or institution. Debt is typically accrued through taking out loans, running up credit cards and not paying bills on time.
Secured Debt
Secured debt is debt with some form of security in the event of non-payment. When a secured debt goes unpaid, the debtor may be entitled to sell the security in an attempt to pay for the debt.
Unsecured Debt
Unsecured debt is debt accrued without anything put down for security. This is typically the case with smaller debts.
Secured Debt Examples
Secured debts are usually for larger, more expensive things where the lender is uncomfortable lending so much money without some form of security. Mortgages and car leases are two examples of secured debt.
Unsecured Debt Examples
While some secured credit cards exist, most credit cards are examples of unsecured debt. Other examples may include student loans, medical bills and rent.
Telling the Difference
If you're still unsure as to what kind of debt you have, ask yourself if the lender can take anything from you if you don't pay. If this is the case, it's a secured debt. You may also consider calling the lender and finding out or looking over the contract for specific details.
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