What is an unsecured debt?

An unsecured debt is a type of debt that is not backed by collateral- meaning that if the debtor fails to make payments, the creditor can’t take away an asset or property to make up the difference. Debts that are secured by collateral are called secured debts. In California and all other states, unsecured debts are often seen in credit card debt, medical debt, and other personal loans. Unsecured debts can also include court-ordered judgments or alimony payments if the court does not specify that a certain asset or property is to be used as collateral. When it comes to debt collection, unsecured debts are usually the hardest to collect on because creditors have no way to enforce payment from the debtor. The only two viable ways for unsecured creditors to collect a debt are to call the debtor and ask for payment or sue the debtor. In California, the creditor has up to four years to collect on an unsecured debt. If the debt is not collected within four years, the creditor must refile the case in order to try and collect the debt again. In any case, the creditor is subject to California’s debtor and creditor laws, which provides protection for debtors from unfair debt collection practices.

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What is an unsecured debt?

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