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Collateral or security refers to assets pledged to ensure loan repayment, resulting in secured loans. If a borrower defaults, the secured creditor can seize and sell the collateral to recover owed funds. Types of collateral include mortgages (secured by property deeds), car loans (secured by vehicles), and rent-to-own loans (secured by purchased furniture). Business loans may be secured by assets like inventory or receivables. In the event of bankruptcy or a consumer proposal, borrowers can either continue payments to retain the asset or return it, including any shortfall in the loan within the filing.