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Simple English definitions for legal terms
Secured debt
Read a random definition: printed-matter doctrine
A quick definition of Secured debt:
Secured debt: When someone owes money to another person or company, and they use something they own as a guarantee that they will pay the money back, it is called secured debt. This means that if the person who owes the money doesn't pay it back, the creditor can take the thing that was used as a guarantee and sell it to get their money back. Examples of things that can be used as a guarantee include a house, a car, or other valuable possessions.
A more thorough explanation:
Secured debt
Secured debt is when a creditor has a claim on a debtor's property that is backed up by a lien. This lien can be created by the debtor's agreement or by a court judgment or taxes. Examples of secured debt include mortgages, equity lines of credit, and vehicle and equipment loans. Other types of debt that can be secured by liens on property include Purchase-money security interest, judgment liens, tax liens, and blanket security liens.
- A mortgage is a type of secured debt because the lender has a claim on the property until the loan is paid off.
- An equity line of credit is also secured debt because the lender can take possession of the property if the borrower defaults on the loan.
- A vehicle loan is another example of secured debt because the lender can repossess the vehicle if the borrower fails to make payments.
- A purchase-money security interest is when a creditor has a claim on property that was purchased with borrowed funds.
- A judgment lien is when a court orders a lien on a debtor's property to satisfy a debt owed to a creditor.
- A tax lien is when the government places a lien on a debtor's property to collect unpaid taxes.
- A blanket security lien is when a creditor has a claim on all of a debtor's property, rather than just one specific asset.
These examples illustrate how secured debt works. In each case, the creditor has a claim on the debtor's property that is backed up by a lien. If the debtor fails to repay the debt, the creditor can take possession of the property to satisfy the debt.