Unsecured Debt

Debt that is given or credit that is extended without a guarantee or any pledge of collateral, e.g. credit cards and signature loans. A holder of such debt is an “unsecured creditor.” Besides not being backed by collateral, unsecured debt has low-priority repayment obligations in bankruptcy proceedings. Because unsecured debt poses greater risks of non-payment to creditors, such debt often has higher rates of interest. Compare Secured debt.