What is the meaning of “unsecured debt”?

Unsecured debt is a type of debt that has no collateral attached to it, meaning that if the debtor fails to make payments, the creditor cannot use an asset to recoup their losses. This type of debt is more risky for the creditor, since they have no assurance that the debtor intends to pay back the loan. The most common type of unsecured debt is credit card debt. Since there is no collateral connected to the creditor, the debtor is solely responsible for making the payments. In the event of a missed payment, the creditor can take legal action but will not be able to seize any assets in order to recover the money owed. Creditors Rights Law in California allows creditors to pursue legal actions in the event of an unpaid debt. This includes suing the debtor, garnishing wages, setting up a repayment plan or filing a lien against the debtor’s assets. Unsecured debt is still eligible for these actions, however, since the creditor has no security they will have to rely on the debtor to make the payments in order to recover their losses.

Related FAQs

What is an involuntary liquidation?
Can creditors take action to collect a debt after the statute of limitations has expired?
What is the meaning of “general unsecured debt”?
What is a claim for alimony?
What is a levy?
What is the meaning of “unsecured debt”?
What is a claim of exemption?
What is the meaning of “secured debt”?
What is the meaning of “creditors’ rights litigation”?
What is a reaffirmation agreement?

What is the meaning of “unsecured debt”?

Related FAQs

Related Blog Posts