What is the meaning of “secured debt”?

Secured debt is a type of debt where the borrower pledges an asset, such as property or a vehicle, as security for the loan. If the borrower does not make the payments as agreed on, the lender can take the asset as payment for the loan. For instance, if a borrower takes out an auto loan and puts their vehicle up as collateral, if they do not make the payments, the lender can repossess the vehicle and try to sell it to collect the money owed. In the state of Tennessee, creditors are protected by law regarding their rights to secure loans, called “Tennessee Creditors Rights Law.” The law covers a variety of matters, including the definition of secured debt. According to this law, secured debt is considered a loan where the creditor has a “security interest” in the property or asset. The security interest gives the creditor a right to take the asset back if the borrower does not meet their obligation to the creditor. Secure debt is often used by lenders when dealing with riskier borrowers. In general, it is seen as a way for lenders to protect themselves from potential loss. In most cases, secured debt requires the borrower to provide a certain level of collateral, which ensures that the lender can recoup something if the borrower defaults on their loan.

Related FAQs

What is a creditors’ committee?
What is a fraudulent transfer?
What is the difference between a secured and an unsecured debt?
What is an adversary complaint?
What is the meaning of “fraudulent transfer”?
What is a preference action?
What is the effect of filing a lien?
What is an allowance of claim?
What is a creditors’ rights attorney?
What is a preference action?

What is the meaning of “secured debt”?

Related FAQs

Related Blog Posts