itor ▁cannot ▁be ▁sure ▁that ▁it ▁can ▁se ize ▁sufficient ▁assets ▁of ▁the ▁deb tor . ▁Because ▁hyp othe cation ▁makes ▁it ▁easier ▁to ▁get ▁the ▁deb t ▁and ▁potentially ▁decre ases ▁its ▁price ; ▁the ▁deb tor ▁wants ▁to ▁hyp othe c ate ▁as ▁much ▁deb t ▁as ▁possible ▁but ▁the ▁isol ation ▁of ▁' good ▁assets ' ▁for ▁the ▁coll ater al ▁reduces ▁the ▁quality ▁of ▁the ▁rest ▁of ▁the ▁deb tor ' s ▁balance ▁sheet ▁and ▁thus ▁its ▁credit ▁worth iness . ▁ ▁The ▁detailed ▁practice ▁and ▁rules ▁reg ulating ▁hyp othe cation ▁vary ▁depending ▁on ▁context ▁and ▁on ▁the ▁juris diction ▁where ▁it ▁takes ▁place . ▁ ▁In ▁the ▁US , ▁the ▁legal ▁right ▁for ▁the ▁cred itor ▁to ▁take ▁ownership ▁of ▁the ▁coll ater al ▁if ▁the ▁deb tor ▁defaults ▁is ▁class ified ▁as ▁a ▁li en . ▁ ▁Re h yp othe cation ▁occurs ▁mainly ▁in ▁the ▁financial ▁mark ets , ▁where ▁financial ▁fir ms ▁re - use ▁the ▁coll ater al ▁to ▁secure ▁their ▁own ▁borrow ing . ▁For ▁the ▁cred itor ▁the ▁coll ater al ▁not ▁only ▁mit ig ates ▁the ▁credit ▁risk ▁but ▁also ▁allows ▁ref in ancing ▁more ▁easily ▁or ▁at ▁lower ▁rates ; ▁in ▁an ▁initial ▁hyp othe cation ▁contract ▁however , ▁the ▁deb tor ▁can ▁restrict ▁such ▁re - use ▁of ▁the ▁coll ater al . ▁ ▁In ▁consumer ▁and ▁business ▁fin ance ▁Hyp othe cation ▁is ▁a ▁common ▁feature ▁of ▁consumer ▁contract s ▁involving ▁mort g ages ▁the ▁deb tor