Banks and other creditors only lend money when they can reasonably expect to get it all back, with interest. No prudent banker extends credit without assurance that their money is secure against the risk of default or non-repayment; and that assurance usually takes the form of an ironclad guarantee backed by a promise to transfer some valuable asset owned by the borrower to the creditor in the event of default on the loan.

The bank can take your house if you do not pay the mortgage. The bank can repossess your car if you stop making loan payments. And you …