What is the meaning of “unsecured creditor”?

An unsecured creditor is someone who has lent money or merchandise to someone else, such as a business or an individual, but has not secured their debt with any collateral or other form of security. This means that the creditor has not taken possession of any assets of the borrower in exchange for the loan, such as a home or a car. An unsecured creditor is not entitled to any form of priority when it comes to the collection of their debt. According to Washington Creditors Rights Law, unsecured creditors are paid out of the proceeds of a debtor’s assets after all secured creditors have been paid. Unsecured creditors have no legal right to any particular repayment plan or collection efforts from the creditors. Instead, they must rely on the debtor to voluntarily make payment. In some cases, unsecured creditors may be able to pursue legal action to collect what is owed to them. This is in addition to any other collection efforts that have been undertaken.

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What is the meaning of “unsecured creditor”?

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