What is Secured Debt in Bankruptcy?

A debt is considered secure when it is tied to a specific item of property, called collateral, that guarantees the payment of the debt. Common examples of secured debts are car loans and mortgages, where the house or automobile serve as collateral for the debt. Secured debts may also include home equity loans or HELOC’s, loans for a range of vehicles beyond cars from boats or tractors to RVs, loans for business equipment, machines or inventory and even store charges made with a credit card that include security agreements retaining the interest in hard goods. Sometimes property you already own may be used as collateral for a debt. An example of this may be using a car you own outright or other property you may have of value as collateral to get a loan from a bank. Because the property is collateral for the loan, if you do not make your payments, a bank can foreclose on your home, repossess your car or claim other property you pledged as collateral in order to pay the debt.