Q.What is a Secured Debt versus an Unsecured Debt?

A.A secured debt is a debt backed by collateral, mortgage or lien. With a secured debt, if the borrower fails to pay the loan or debt in a timely manner, the lender has the right to reclaim a specific piece of property (e.g., if a debtor fails to pay his or her mortgage, the lender can reclaim the property; if the debtor fails to pay a car loan, the lender can repossess the vehicle). In a bankruptcy case, secured debts are repaid from the proceeds of the collateral securing the debt.

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