Secured Debt – Help & Advice

A secured debt is a loan that is backed by assets which reduces the risk associated with lending. This means if someone defaults on a payment assets, such as a property, can be seized as repayment.


Knowing the difference between the types of debt you possess is vital when searching for debt relief as this can have an impact on the support available to you.

If you opt for a secured loan it’s imperative to be aware that if you don’t keep payments up-to-date your creditors have the option to seize your assets, sending you into a further spiral of despair.

Understanding secured debt

A secured debt is simple to understand – it’s a debt that is taken out against an asset offering greater security to lenders.

In simple terms, if you’re unable to pay creditors have the authority to claim collateral, such as your home or vehicle, to reclaim the debts owed to them.

In Canada the two most common secured debts are a mortgage and a lien when you finance the purchase of your car. Debts that require a guarantor can also sometimes be classified as secured too. This is because the lender can approach the guarantor for payment if you’re unable to repay what you owe, however, it’s important to note that the lender has no security against any of your assets.

Secured loans are generally easier to qualify for than unsecured loans, mainly because the creditor has the assurance that they will be able to recover all or most of your loan debts should you fail to make payments – this is particularly true for those with poor credit or are rebuilding their credit.


In Canada the two most common secured debts are a mortgage and a lien when you finance the purchase of your car.

Examples of secured debt

Mortgage: This is the most commonly cited example of secured debt. According to industry figures Canadians across the country are living beyond their means, with 41% concerned about their level of debt and mortgage debt is continually increasing. By defaulting on your mortgage payments, or indeed any other secured loan, you are at risk of losing your property.  

Car loans: For many, taking on financial support to buy a car is a necessity – especially for those who are required to drive or work or family commitments. Recent figures reveal that more than half of new Canadian car loans carry 84-month terms. When dealing with long-term financing it’s important to recognise that falling behind on payment could lead to the loss of your vehicle and could have a negative impact on your credit rating.

Rent-to-own: Going down a rent-to-own route is an alternative to homeownership for those who can’t get traditional financial backing due to poor credit or don’t have enough money for a down payment. If all goes according to plan by the end of the agreement, you’ll have repaired your credit and saved enough to secure a mortgage. However, should you fail to keep up with payments you could lose the entire investment.

 Tax or government debt: The Canada Revenue Agency (CRA) has a range of fiscal powers to reclaim any unpaid tax or government debts, including wage garnishments, investment seizures and freezing bank accounts. The CRA can also register a lien on a residential home should you fail to repay these debts.

Warning Signs

Admitting you’re in financial hardship isn’t always easy, however, it is the first step towards a debt free future. So just how do you know if you’re struggling?

  • Are your mortgage payments up to date? Falling behind on what is possibly the most important payment you must make each month is a sign of financial distress. If you fail to stay on top of your payments your bank or lender could foreclose and assets to be repossessed.
  • Are you cutting back? If you find yourself cutting back on everyday essentials and are feeling a financial pinch when you’re at the supermarket it could be a sign that you’re struggling with debts in other aspects of your life.
  • Is it becoming more difficult to make your pay packet stretch to the end of the month? Finding yourself strapped for cash before your next payday can be a sign that you’re paying out more than you can afford and should consider a little financial support.
  • Do you find yourself hiding your spending or your debts from a partner? It can be all too easy to stick your head in the sand and avoid talking about your issues, however, secretive behaviour can be a sign that you’re not handling your problems.
  • Are you losing sleep because of your money worries? If you find yourself lying awake at night concerned about how you’re going to make your next mortgage or car payment this can be a sign that you’re in financial distress.

How to handle secured debt

Living in debt be an isolating experience, however, there are thousands of Canadians in a similar situation. At Money Advice Canada we have decades of international experience helping people on their journey to a debt free future.

Our professional debt solution advisors are on hand to discuss your financial profile, free of judgement, and guide you through the debt solutions best suited to your needs.


Warning Signs

Living in debt be an isolating experience, however, there are thousands of Canadians in a similar situation.

How we can help you with your debt?

You’re on your way to resolving your debt problems, this is what will happen next.

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