Unsecured debt

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Unsecured debt

Debt that does not identify specific assets that the debtholder is entitled to in case of default.

Unsecured Debt

A debt that is not secured by an asset or lien, but rather by the all issuer's assets not otherwise secured. This means that an unsecured debt carries no collateral; in case of bankruptcy, the debt holder is considered a general creditor. Thus, the debt holder is paid out of funds that do not have a prior claim on them with a secured debt. Some unsecured debts, such as Treasury securities, are considered risk-free.
References in periodicals archive ?
The proposed means-testing legislation would require debtors with income levels sufficient to repay part of their unsecured debts to file under Chapter 13--which says debtors must repay their debts over a three- to five-year period.
Proposed rules for small businesses reorganizing under a Chapter 11 bankruptcy would increase reporting requirements, heighten supervision, shorten deadlines and apply to all businesses with unsecured debts of $5 million or less.
Under both bills, debtors with sufficient income to repay a percentage of their unsecured debts would not receive the full discharge formerly available under Chapter 7 and would be required to pay part of their debts under a Chapter 13 repayment plan.
The Senate bill allows a Chapter 7 case to be converted to a Chapter 13 case if the debtor can repay at least 20% of unsecured debts.
The House bill adopts most of the NBRC's small business recommendations, which apply to all businesses with unsecured debts of $5 million or less.