cross-collateral
- The process where collateral used for a new loan also secures a preexisting unsecured debt
- In order to acquire a new loan for his business, the owner offered as cross-collateral property he had already pledged for an earlier loan.
- A debt can be secured by cross-collateral, where the same asset is used for more than one loan.
- Should a debtor default, a lender may take possession of the cross-collateral regardless of which debt the default was tied to.
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