Secured Debt Definition

Any debt that is legally tied to an asset by a lien specifying the asset as collateral is said to be a secured debt. Secured debt is considered less risky for a lender and usually has a lower interest rate than unsecured debt. If the borrower defaults on loan repayment, the lender is legally entitled to seize the collateralized asset and liquidate it to satisfy all or part of the outstanding debt (the borrower remains legally responsible for any remaining debt). Mortgages are lien documents establishing a mortgage loan as a secured debt where the house itself is the collateral.