Pledge:
A pledge is a deposit of personal property as security for a personal loan of money. If the loan is not repaid when due, the personal property pledged is forfeited to the lender. The property is known as collateral. A pledge occurs when someone gives property to a pawnbroker in exchange for money. The pledgee has the right of selling the pledge if the pledgor make default in payment at the stipulated time.
hypothecation:
It is defined to be a right which a creditor has over a thing belonging to another, and which consists in the power to cause it to be sold.
Hypothecation is an agreement whereby a person puts up collateral to secure the debt of another. If the debt is not paid, the creditor may have the property seized to satisfy the debt. Thus in hypothecation, the property is liable for the debt, not the person guaranteeing the debt.