What is a secured debt?

A secured debt is a debt that is backed or secured by a type of collateral. Collateral is something of value that a creditor can seize if the debt is not paid. In Washington, some common types of collateral used to secure a debt are real estate, cars, or jewelry. A creditor can take legal action to repossess or foreclose on collateral if the debt is not paid. For example, if a borrower does not pay their mortgage, the lender can foreclose on the house and sell it to recover the debt. When a creditor holds collateral as security for a debt, they have a higher level of protection against non-payment than if the debt was unsecured. This means that if the borrower does not pay the debt, the creditor can take the collateral and use it to pay the debt. This gives them a priority position in collecting the debt, meaning they are more likely to get their money back. In Washington, creditors rights law ensures that consumers are treated fairly and protects them from misrepresentation or fraudulent practices. Creditors must provide complete and accurate information to borrowers and must explain their rights and obligations when a debt is secured. They must take reasonable steps to recover the debt, such as providing the borrower with an opportunity to pay and working with them to create a repayment plan.

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What is a secured debt?

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