Investopedia

Continue to Site »

Unsecured Debt

Filed Under »
Dictionary Says

Definition of 'Unsecured Debt'

A loan not backed by an underlying asset. Unsecured debt includes credit card debt, medical bills, utility bills and any other type of loan or credit that was extended without a collateral requirement. It presents a high risk for lenders since they may have to sue to get the money they're owed if the borrower doesn't repay the full amount owed. As a result of this high risk, unsecured debt tends to come with a high interest rate. Unsecured debt can be wiped out by bankruptcy, but taking this dramatic step makes it more difficult to obtain financing for the next seven to 10 years.
Investopedia Says

Investopedia explains 'Unsecured Debt'

Secured debt, on the other hand, is backed by an asset, also known as collateral. Under the terms of a secured loan, the lender can seize the collateral used to guarantee the loan if the borrower defaults. Examples of secured debt include mortgages, which are secured by houses, and auto loans, which are secured by cars. Because the borrower has more to lose by defaulting on a secured loan and the lender has something to gain, this type of loan will have a lower interest rate than an unsecured loan.

Articles Of Interest

  1.

    A Guide To Debt Settlement

    Find out how you can negotiate your way to a lower debt load by paying up front.

  2. Negotiating A Debt Settlement

    If you're being harassed by a debt-collection agency, you can take charge. Find out how.

  3. 5 Ways To Control Emotional Spending

    Follow these five simple steps to keep your spending under control.

  4. A Lifeline For Those Drowning In Debt

    Don't wait to be saved, find out where the lifesaving devices are and hang on tight!

  5. In a corporate liquidation, why are unpaid taxes and wages paid before general creditors but after secured bondholders?

    The Bankruptcy Code, section 507, states that when a corporation is liquidated, creditors are paid in a particular order: Secured creditors, like secured bondholders. Unsecured ...

  6. 5 Signs That You're Living Beyond Your Means

    Learn what to watch for before you find yourself drowning in debt or filing for bankruptcy.

  7. What You Need To Know About Bankruptcy

    Don't choose this last-resort option until you learn how it will affect your future.

  8. Changing The Face Of Bankruptcy

    A 2005 law attempts to unmask fraudulent debtors and still save those who are struggling. Will it affect you?

  9. Stop Keeping Up With The Joneses - They're Broke

    Conspicuous consumption could be robbing you of future wealth.

  10. Bloated Budget? How To Trim The Fat

    Blood, sweat and tears should belong in the gym, but your money deserves some training time too.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  2. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  3. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.

  4. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.

  5. Consequential Loss

    The amount of loss incurred as a result of being unable to use business property or equipment.

  6. Lease To Own

    An arrangement where an individual enters into a lease agreement with an owner with the inclusion of a clause that typically gives the individual the right, but not the obligation, to purchase the item leased at a predefined price and time.
Trading Center