What is Unsecured Debt?

Unsecured debt includes most types of credit cards, some store cards (for example, a clothing store card), medical bills, dental bills, and sometimes personal loans.  Unsecured debt is debt that is not “backed up” by collateral. The person or company to whom you owe the debt cannot take anything away from you. If you don’t pay, they will instead try to collect from you by either sending you to a collection agency or if that doesn’t work, they may sue you. If a creditor wins a lawsuit against you, they can ask the court to enforce it by doing things like garnishing your wages where payment to the creditor would come right out of your paycheck.  Unsecured debt is treated differently than other kinds of debt in bankruptcy.

Carol O'Connor Cadiz
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Attorney & Owner at O'Connor Cadiz Law: Injury & Accidents, Disability Insurance.