Simple English definitions for legal terms
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Cross-collateral is when someone uses more than one thing as security for a loan. For example, if you borrow money to buy a car and use your house as collateral too, that's cross-collateral. It means that if you can't pay back the loan, the lender can take both your car and your house to pay off the debt.
Definition: Cross-collateral refers to security given by all parties to a contract. In bankruptcy, it is a security that protects a creditor's post-petition extension of credit and pre-petition unsecured claims, which obtain priority over other creditors' pre-petition unsecured claims.
Examples:
These examples illustrate how cross-collateral works in practice. It allows lenders to secure their loans by using multiple assets as collateral, which can be beneficial for both the lender and borrower. However, it can also be risky for the borrower, as defaulting on one debt can result in the loss of multiple assets.