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 Utah, as in most states, the law of secured transactions is governed by the Uniform Commercial Code (UCC), particularly Article 9, which has been adopted into state law. When a business or individual borrows money or obtains goods on credit, the creditor may require collateral to secure the debt. This means that the borrower pledges assets, which could be repossessed or foreclosed upon if the borrower defaults on the loan. Secured transactions provide the lender with a security interest in the collateral, which is a legal right or interest that a creditor has in the borrower's property, until the debt is paid in full. If a borrower defaults, the lender may use legal processes such as attachment or repossession to take ownership of the collateral. On the other hand, unsecured transactions do not involve specific collateral. Creditors of unsecured debts, such as those issuing business credit cards, do not have a direct claim on the borrower's assets. However, if the borrower fails to repay an unsecured debt, the creditor can still pursue legal action, such as filing a lawsuit, to collect the debt. It's important for borrowers to understand the terms of any credit agreement and the rights of secured and unsecured creditors under Utah law and the UCC.