What is a secured debt?

Secured debt is a type of debt that is backed by collateral, meaning that a creditor has a right to take specific property from the debtor if the debt is not paid. In New York, this type of debt is governed by the Creditors Rights Law. When a loan or credit agreement is secured, the debtor is obligated to sign a promissory note or security agreement that states they are promising to pay the creditor a certain sum of money. In exchange, the creditor can take certain collateral if the debt is not repaid. The collateral can be tangible, such as property or vehicles, or intangible, such as stocks and bonds. Along with the promise to repay, the creditor is also granted certain rights that are specific to the type of collateral that was pledged as security. For example, if a vehicle was used as collateral, the creditor can repossess the vehicle if the debt is not paid. The creditor may also be allowed to sell the collateral to pay the debt. Therefore, a secured debt is a debt that has been backed by collateral, and the creditor has certain rights to take the property or assets of the debtor if the loan is not paid. This type of debt is subject to the Creditors Rights Law in New York.

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