Unsecured debt

(redirected from Uncollateralized Debts)

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.
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The poorer repayment rates we observe for uncollateralized debts may suggest an association between debt awareness and debt repayment quality.
The two prominent potential explanations for the remaining gap between SCF and CCP credit card debt levels are the possibility of social stigma attaching to the use of uncollateralized debt, and the possibility that borrowers are not well informed about their credit card debt levels.
We also find a noteworthy gap in the lender- and borrower-reported levels of the other major uncollateralized debt category, student loans.
Do we know what we owe? Consumer debt as reported by borrowers and lenders

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