What Makes a Secured Loan a Secured Loan?

michael1983l

I have a loan to my parents that I need to prioritise over my other debts for obvious reasons. My question is, could I have a credit agreement drawn up by them to make it into a secured loan, thus making it a priority debt?

Clive_Woody

It needs to be secured against something of value (normally a house). Do you own a property that you could secure this loan against?

michael1983l

Clive_Woody wrote: »

It needs to be secured against something of value (normally a house). Do you own a property that you could secure this loan against?

No. Could it not be secured against future income?

Thrugelmir

Secured requires a "charge" over something tangible.

If you intend defaulting on debt then any such contractual agreement could be deemed void.

michael1983l

Thrugelmir wrote: »

Secured requires a "charge" over something tangible.

If you intend defaulting on debt then any such contractual agreement could be deemed void.

I don't intend defaulting on a debt to my parents, thats the whole point.

Question is, is future income a tangible item to secure over. I have virtually nothing of any value otherwise?

superbigal36

What about a Kidney

CLAPTON

michael1983l wrote: »

I don't intend defaulting on a debt to my parents, thats the whole point.

Question is, is future income a tangible item to secure over. I have virtually nothing of any value otherwise?

obviously not: future earning are uncertain and anyway you can spend them on what you like
whilst a property with a charge on it would be unsellable until the charge is lifted by the interested party


anyway what are you trying to achieve: surely your parents' trust you?

DCFC79

Why do you need to secure it, just agree to pay them x amount each month and for how many months.

Thrugelmir

I don't intend defaulting on a debt to my parents, thats the whole point.

My comment was made in a broader context of there being other debts.

michael1983l

Because I can't pay all of my debts and my parents can't afford to cover the loan they took for me. So by making it secure I could preference them to unsecured debts. But looking like it is not possible, was just a thought.

imoneyop

michael1983l wrote: »

I have a loan to my parents that I need to prioritise over my other debts for obvious reasons.

A court is unlikelyto agree with you that the loan your parents gave you is a higher priority than the other debts that you have - if a lender takes you to court and wins then the judge will not consider your unofficial arrangement with your parents as a priority over debts that you signed a contract to repay and are now defaulting on.

Your parents have to accept that they are at the bottom of the pecking order - if they need the money that urgently then they shouldn't have let it to someone who is clearly spending more than they can afford.