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 |
'i have credit card debt of about 14,000 dollars on three cards . my income is aprox. $37,000, mortgage is $425 biweekly car pymnt is $239.00/month life ins. $120.00 I have 2 children aged 12 and 17'
'cibc credit card - 20,000 scotia creditcard- 6,000 citi credit card - 10,000 presently laid off from my job,looking for another,curious what my options are?'
.I owe 14,000.00 credit card. 2)" "10'000.00 line of credit. 3)" "12'000.00 loan.(2 yrs left to pay) basically looking to free up some cash.I feel my only option is to claim bankruptcy.'
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