Unsecured debt

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.