LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Accounting term

shalu gupta (student) (70 Points)

22 August 2012

1. what is the diff in secured deb. and unsecured deb.

2. how it effect if debenture holder holing pref. share and holding equity sh.

Reply
Follow
Share

2 Replies

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 23 August 2012

Secured debts are tied to an asset that's considered collateral for the debt. If the lender has to take your asset because of you've become fail to comply with debt terms (Fail to pay), the asset will be sold. If the selling price for the asset doesn't completely cover the debt, the lender may pursue you for the difference. If the selling price for the asset doesn't completely cover the debt, the lender may pursue you for the difference.A mortgage and auto loan are both examples of secured debt. For unsecured debt, lender dont have the right to any collateral for the right. If you fall behind your payment, they dont have right to take away your assets. However, they take actions like take your to court, assign debt collector etc. Personal loan on salary certificate and credit cards are examples. All your End of Service benefits will go to Bank and they will release what balance after settling loan.

1 Like

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 23 August 2012

For the second question, to my limited knowldege, Debenture holders are creditors and and on litigation or claims, being equity holders as well, they will have claim against their own property.

1 Like