What is the difference between a secured and an unsecured debt?
A secured debt is tied to some property of the debtor, to give the creditor some collateral. For example, a bank will often hold a lien on real estate or a vehicle, to ensure that the debtor will pay their bills. Unsecured debt, like credit cards and some types of loans, cannot claim any property of the debtor and simply has to rely on interest payments and late fees to discourage defaults on bill payment.
