Secured and Unsecured Debt

What is Secured and Unsecured Debt

Credit is either considered unsecured or secured against some real property that you own, for example secured against your home.

Types of Unsecured Credit

There are usually two types of credit available to consumers: unsecured credit and secured credit.

Unsecured credit is given without having collateral given for the debt, e.g credit cards, cell phone bills, personal loans or student loans.

Secured credit is a loan that was given where there a tangible piece of property that can be seized if the debt is not paid.  e.g. if you stop making payments on your car or home, then the loan or mortgage holder would come and seize the property.

What is Unsecured Credit?

Unsecured credit is credit where there is no security provided, examples of unsecured credit are:
Unsecured Credit | Consumer Proposals

  • credit cards,
    • company credit card cards and gas cards
  • utility bills like
    • electrical, water or gas bills
  • cell phone or telephone bills
  • personal loans, rent and medical bills
  • student loans

With unsecured debt, the creditor cannot take back property when you stop paying. The creditor has to go to court and sue you for the cash value.

People qualify for unsecured credit based on:

  • their credit history
  • financial strength, and
  • their earnings potential

★★★★★ After years of struggling with credit cards, I was deeper and deeper in the hole. I’m now I’m stress free, the calls have stopped and I will be free of debt in five years, Many thanks! Julie Davies, Oshawa.

What is Secured Credit?

Secured credit is a loan that has been secured by a tangible piece of property.  Where the borrower doesn’t pay the loan the creditor can take back the property used as security.

For example if you stop making payments on your car loan, the lender would have the vehicle repossessed.

Secured credit applies to things like:

  • home mortgages,
  • cars, vehicles, boats, recreational vehicles
  • some business loans

Where you are unable to make the payment on a secured loan, the mortgage holder or lien holder would reclaim the property.

Where you wanted to keep these assets, you would just continue paying the lender according to the payment agreement.

Be Debt Free Today

As licensed insolvency trustees, we help people with consumer proposals, debt solutions, and filing for bankruptcy. We’re in the business of getting people out of debt and we can help you.

There is no cost to come and discuss your finances with us at one of our six (6) offices throughout Durham Region and the GTA.  We have years of experience, have helped hundreds of people over the years and we can help you.

Call us at 905-721-7506.

Call 905-721-7506