Secured debt

Secured debt – Per the provisions of the Law of Contracts in some jurisdictions, a secured debt is a type of financial debt which has been secured with a mortgage, financial guarantee, pledge or other kind of legal burden established in favor of the creditor. So then in case of evendual lack of repayment by the debtor, the creditor reposses the property, receives the pldged money or point an execution procedure against the burdened assets in order to take these to a public auction via the bailiff and to be paid off. In practice, a secured financial debt (a credit loan) could be secured with mortgage on real estate, financial guarantee on money in the debtor’s bank account, pledge on company shares owned by the debtor, etc. Once the debt has been paid back in full, i.e. once the creditor has been satisfied, they issue approval for releasing (removing) the security, so the debtor can obtain a clean financial record (for the purposes of future loans, usually).

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