In finance, unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in a bankruptcy or liquidation.
In the event of the bankruptcy of the borrower, the unsecured
creditors will have a general claim on the assets of the borrower
after the specific pledged assets have been assigned to the secured
creditors.
Although in a liquidation the unsecured creditors will usually
realize a smaller proportion of their claims than secured creditors.
In some legal systems, unsecured creditors who are also indebted
to the insolvent debtor are able (and in some jurisdictions,
must) set-off the debts, which actually puts the unsecured creditor
with a matured liability to the debtor in a pre-preferential
position.
Credit card debt, medical
bills in collections, department
store cards, signature loans, unsecured
lines of credit, and revolving
charge accounts are all types of accounts that can be
included in our debt settlement program.
RESOURCES: Unsecured Debt
FTC Bureau
of Consumer Protection - Consumer Information: Credit & Loans
Credit Report
and Score Information from Experian.com
TransUnion
- Check Your Credit Report and Credit Score Online, Instantly
and Securely
Equifax
Products: Credit Reports, Credit Scores & Identity Theft
Protection
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Personal Finance Money Tip: Have an emergency fund. Have at least three months' income (some say six) in a high-yield savings account that can be easily accessed. |
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