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Secured Debt

Definition - What does Secured Debt mean?

A secured debt refers to debt that is incurred through a loan of some sort and that is secured by something other than the debtor’s promise to pay the debt back. Secured debt is a very popular form of debt because it allows the lender to have much more security in lending money then he or she would otherwise have. If you are paying on an auto loan, you have a secured debt. The vehicle is the security. If you do not pay the loan, then the creditor can take the vehicle.

Justipedia explains Secured Debt

One of the most common forms of a secured debt is that of a mortgage. When a person buys a home, typically they receive a mortgage from the bank. In this situation, the bank pays the seller of the house the full price of the house up front, and then the buyer of the home pays back the bank with some interest added to the transaction. A mortgage is a secured debt because if the purchaser of the home does not pay the bank back, then the bank can foreclose on the house and sell it in the open market.

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