When a person or business borrows money, or purchases or leases goods on credit (without paying the full purchase price up-front), the credit extended to the borrower (1) may be secured/collateralized by money or other assets, or (2) may be unsecured. For example, if your business takes out a loan from the bank, the bank will likely require you to pledge certain assets as security or collateral for the loan—and if you default on the loan, the bank may use the legal process (attachment, repossession) to gain ownership of those pledged assets to satisfy the debt.

Other transactions in which a creditor extends credit to your business may be unsecured—such as the bank that issues your business credit card without requiring you to pledge specific assets as collateral in case you fail to make the payments. But even an unsecured creditor can file a lawsuit against you or use other means to collect the debt you agreed to repay. The law of secured transactions is generally governed by the uniform commercial code (UCC), which has been adopted and made the law in some form in most states.

In Georgia, as in most states, the law of secured transactions is governed by Article 9 of the Uniform Commercial Code (UCC), which has been adopted into state law. When a person or business in Georgia borrows money or obtains goods on credit, the credit may be either secured or unsecured. Secured credit involves the borrower pledging assets as collateral. If the borrower defaults, the lender has the right to repossess or foreclose on the collateral through legal processes such as attachment or repossession to satisfy the debt. For example, if a business takes out a loan and pledges equipment as security, the bank can claim that equipment if the business fails to repay the loan. On the other hand, unsecured credit does not involve collateral. Creditors of unsecured debt, such as issuers of business credit cards, do not have a direct claim on the borrower's assets. However, if the borrower defaults, the unsecured creditor can still pursue legal action, such as filing a lawsuit, to collect the outstanding debt. It's important for businesses to understand the implications of both secured and unsecured credit and to be aware of their rights and obligations under Georgia's adoption of the UCC.