Secured Debt:
This is debt ‘secured’ by collateral. A familiar example
of this would be a financed car purchase, by which the purchase
has been financed by a lender who has registered its interest on
the vehicle. In the event that the purchaser fails to make payments,
the lender can then repossess the vehicle. If the purchaser then
fails to catch up the missing payments and the costs of repossession,
the lender can simply sell the vehicle. Any shortfall, known as
a ‘deficiency balance,’ between what the lender gets
from the sale and the loan plus repossession and sales expenses
becomes, in most jurisdictions, the responsibility of the borrower
to pay. There are some exceptions, such as British Columbia, where
the lender cannot pursue the borrower for this difference.
Unsecured Debt:
This is debt for which there is no collateral or security held.
What unsecured means is that if the payments are not made as required
there is no collateral to repossess. In other words, the debt is
only backed by a promise to pay. Examples of this kind of debt are
credit cards, bank/credit union overdrafts, many Lines of Credit
and personal loans. Interestingly, the ‘deficiency balance’
mentioned above is actually considered unsecured debt, the collateral
having been seized and sold.
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| Sample Client Contacts |
'Would a couple who owns property (bank owns actually) be able to use this service? CC (credit card) debt of $25,000 LOC (Line of Credit) of $75,000, plus outstanding to CRA...they say $39,000...we are heavily indebt due to CRA refusal to allow our tuition/education expenses for our daughter for the past 12 yrs...thoughts?? Would we lose our home and cottage property??'
'have incurred about 74,000 in student debt. I need information on how to pay off the principle on 3 loans: American Educational I Services l (CANhelp) a line of credit from my bank and OSAP. I have finished teachers college and cannot find a job'
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