What is the difference between secured and unsecured debt?

The difference between secured and unsecured debt in North Carolina is the presence of collateral. Collateral is the property or asset that is put up to secure a loan. Secured debt refers to any loan that is backed by collateral, such as a home or car loan. The collateral associated with the loan acts as a guarantee to the lender that they will be able to recover their money if the borrower defaults on the loan. In North Carolina, if a borrower defaults on a loan that is backed by collateral, the lender can repossess the collateral to recoup their losses. Unsecured debt refers to any loan without collateral. This type of loan carries more risk for the lender, as there is no collateral to use in case of a default. An example of unsecured debt is a credit card or student loan. If a borrower defaults on an unsecured loan, then the lender is reliant on other methods of debt recovery, such as wage garnishments or filing a lawsuit. In North Carolina, the lender may also be able to place a lien on the borrower’s property in order to secure the loan.

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What is the difference between secured and unsecured debt?

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