What are secured and unsecured debts?
Unsecured debts are debts which are not “secured” by any collateral. These can include personal loans, credit cards issued by banks, such as Visa, MasterCard, American Express, or Discover, and other credit cards used to purchase consumable items. Vehicle leases are unsecured debts. Medical bills and personal loans are also unsecured debts. Secured debts are those which are “secured” by some kind of property as collateral to guarantee payment for the debt. These typically include mortgages, car loans, loans from finance companies, which can be secured by purchases of household items, furniture, computers or electronics. If you purchase goods using a store based credit card, like Best Buy or Rooms to Go, the store typically asserts that they are a secured creditor as the credit agreement gives them a security interest in the financed items.
