What is the difference between secured and unsecured creditors?
Secured creditors and unsecured creditors are two types of creditors in Texas business transaction law. A secured creditor has a claim over specific property owned by the debtor, called a security interest. This can be a mortgage on a house, a car loan, or any other types of loan where the creditor has a claim over a physical item. In the event that the debtor is unable to pay back the loan, the secured creditor has the right to take possession of the property. Unsecured creditors, on the other hand, do not have a claim over any property. This includes most types of credit card debt, medical bills, and other debt that do not involve physical items. In the event that the debtor is unable to pay back the loan, the unsecured creditor does not have the right to take possession of any property. Rather, they can take legal action to try and get the debt paid.
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