What is the difference between secured and unsecured debt?

Secured debts are debts that have been "secured" with collateral. Collateral is something of value, like a car, a home, or other valuable property. If the debt is not paid, the creditor has the right to take the collateral in order to repay the debt. Examples of secured debts include mortgages, auto loans, and other kinds of consumer loans. Unsecured debts do not have collateral that can be taken by a creditor. Examples of unsecured debts are credit card debts, medical bills, and payday loans. The creditor does not have the right to take any specific assets in order to repay the debt if it is not paid. However, the creditor may sue the debtor for the debt and obtain a court judgment in order to collect on it. In Maryland, bankruptcy law allows debtors to either try and repay secured debt or discharge the debt entirely. With unsecured debts, bankruptcy law can provide relief from having to repay the debt. Depending on the type of bankruptcy filed, unsecured debt is entirely discharged or a payment plan is set up to repay a portion of the debt.

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What is the difference between secured and unsecured debt?

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