What is Secured Debt

What is "secured debt"

When others refer to "Secured debts" they are usually referring to debts which have collateral backing them in the form of a lien. A lien is a monetary claim against a home to be satisfied before full ownership can take place. An example would be a loan on your house. The mortgage company actually owns your house until you have satisfied the lien (mortgage) by paying off the amount you owe to them.

Examples of Secured Debts are:

• Mortgages (1st, 2nd & HELOC)

• Car Loans

• Bank Personal Loans that are tied to a house, car, boat or other valuables.

• IRS Tax Liens (usually tied to a house or established as a garnishment of wages)

Typically secured debts are not negotiable. Really the only way to satisfy a secured debt is to pay it off or get another loan with a lower rate to pay it off.

Using a secured debt loan to take care of your bills and stop creditor harassment can be a good first step towards your credit repair. Since a secured loan is fully secured with collateral by you, the borrower, the lending company will offer it to people even suffering from bad credit. The company lending to you will look at your debt outstanding, what exactly you are willing to secure it with in order to determine its value, and possibly look at your credit score. However, since it backed by collateral it is not really necessary because given the worse case where you don't pay back the loan, the lending company can claim ownership of your collateral and sell it in order to recover the loan.
To be able to obtain low interest rates when applying for a loan, you will want to make sure that your credit score is in the best shape possible. This will not only help you save money but could be helpful in providing debt relief too.