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What is secured debt and unsecured debt?
Generally there are two types of debt – secured debt and unsecured debt.
- Secured debt means the creditor (or person) you owe money to has the legal right to repossess the goods or property that the loan is secured against. Examples of secured debts are mortgages, secured loans on property or Hire Purchase (HP) normally found on vehicles.
- Unsecured debts are not secured to anything and therefore the creditor does not have the automatic right to repossess any goods even if you are struggling to repay the money that you owe. Examples of unsecured debts are credit cards, loans, storecards, catalogues, overdrafts, income tax bills etc.