What is the difference between a secured and an unsecured debt?

In Florida, creditors rights law governs the rights of creditors to collect their debt from borrowers. The two main types of debt secured and unsecured - have different rules and rights attached to them. Secured debt is a loan that is guaranteed by collateral from the borrower. That collateral acts as a guarantee for the lender that the debt will be repaid. Examples of secured debt include mortgages, auto loans, and home equity loans. In the event the borrower defaults on the loan, the lender can pursue actions to take the collateral. In contrast, unsecured debt does not have collateral associated with it. This is a ‘riskier’ type of debt for the lender because there is not any ‘security’ if the borrower fails to repay. Examples of unsecured debt include credit card debt, medical bills, and personal loans. The lender cannot take any physical assets if the borrower defaults. Instead they have to pursue other methods such as suing the borrower, debt collection agencies, or placing a lien on the borrower’s property. In Florida, creditors rights law protects both secured and unsecured debts. It allows creditors to collect a debt in a timely manner regardless of the type. It also outlines the responsibilities of the borrower in repaying the debt and allows for legal options to be pursued in the case of default.

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