Question: What Is Secured Debt?
"I had to fill out some forms to get an estimate on debt settlement services, and it asked about how much secured debt I have. What exactly is secured debt?"
Secured debt is any debt that is held against collateral, whether the collateral is the item on credit or not. The two most common examples of secured debt include mortgages and car loans.
When you get a home loan, the house itself it security against the mortgage. If you don't pay your mortgage bills, the lender can repossess the home and sell it to get their money back. This 'security' makes the loan less risky, because the lender has an immediate course of action to take in the event you default on the loan. The same can be said about car loans - when you don't pay, they take the car back.
A loan can also be secured with collateral that is not directly related to the loan itself. For example, you could use your home as collateral against a cash loan for a boat, and the lender would take and sell the home were the boat payments defaulted.
Secured debt usually comes with better interest rates than their unsecured counterparts, and that's the reason many debt consolidation programs require some sort of security in order to provide the lower interest loan required.
Secured debts are also significantly harder to negotiate down with creditors, part of the reason settlement services often won't include them.