Therefore, understanding the rights of both creditors and debtors is important. Most of us are aware of our debts. You probably have a mortgage, a car loan, perhaps educational loans or credit card debt. There are two types of debt secured and unsecured. Unsecured debt means there is no property pledged to secure payment as with most credit card debt and educational loans, for example.
Secured loans are easier to collect as long as the collateral is worth enough to cover the debt.
In either case, the loan should be in writing, but unsecured debt is often not documented in a formal agreement. Normally, the lender should begin that process by sending some type of default notice to the debtor. Often, the parties agree at that point to modify the loan terms and avoid conflict. Otherwise, secured creditors will look to the collateral. In most states, it takes a long time to foreclose on a mortgage and gain control of a home.