What is the meaning of “general unsecured debt”?
General unsecured debt is a type of debt owed by a debtor, like an individual or a business, but that is not tied to any specific assets. In other words, if the debtor is unable to make payments, the creditor does not have any right to go after any specific asset to recover the debt in Tennessee. Because of this lack of collateral, unsecured debt is riskier for the creditor, so the interest rates are usually higher than secured debt. Common types of general unsecured debt include credit card debt, medical debt, personal loans, and utility bills. In general, unsecured creditors must go through a process called “collection” in order to recover their debt from a debtor. This means the creditor must pursue payment through a court-managed system. If the court rules in the creditor’s favor, the debtor will have to pay back the debt, plus any interest and legal fees incurred in the collection process. In Tennessee, a creditor can also pursue payment through a “preferential transfer”. This is when a creditor files a complaint with the court to recover a debt from the debtor that is secured by either real or personal property. This usually occurs if the debtor does not have enough money to pay the debt in full, but has assets that can be used to satisfy the debt. Overall, general unsecured debt is a type of debt that is not secured by any particular asset. It is riskier for creditors, and they must pursue payment through collection or a preferential transfer in order to recoup their money.
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