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Unsecured Debt

Definition - What does Unsecured Debt mean?

An unsecured debt is one that has no asset attached to it other than the one that was financed. An unsecured debt lacks any collateral that could be seized if the debt is not repaid. For example, a mortgage for a home is considered an unsecured debt because there is no additional piece of collateral backing the loan. The main asset is large enough to be seized and sold for repayment.

Justipedia explains Unsecured Debt

If a debtor absconds on an unsecured debt, the creditor can take the debtor to court for a judgement. If a person files bankruptcy, the unsecured debts are considered equally and will all receive a portion of the amount owing to them if there are any assets.

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