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Understand the difference between secured and unsecured debt

Buying a home can be a massive undertaking for a Chattanooga resident. After saving their money and enduring exhausting searches for just the right property, they may take the plunge and make an offer on the house of their dreams. If their offer is accepted, they will quickly find themselves in the process of securing a loan and taking ownership of their new residence.

Not everyone who buys a home, though, is able to keep up with the financial management of their home loan. Known as a mortgage, a home loan is held by a lender and repaid by a homeowner. If the homeowner fails to make payments on the loan or otherwise violates the terms of their lending agreement, the lender may take back the owner's home through a process called foreclosure.

When a lender takes back or repossesses an item of property when a loan defaults, the loan may be considered a secured loan. Loans that are backed by property are secured, whereas loans that are not are considered unsecured. A credit card debt may be considered an unsecured loan because if a card holder does not pay off their debt, there is no item of property that the lender can take back to recoup their losses.

Getting help to understand these and other important debt relief issues is a good way for individuals to make sure they are addressing their debt problems in the most effective manner possible. When it comes to paying off loans and seeking debt relief, it is important that individuals understand that their loans may have different priorities and those priorities may depend on whether they are secured or unsecured. Taking steps to address debt could help one obtain a fresh financial start.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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