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What is unsecured debt?

No one ever said life would be easy. In fact, it only gets harder as you get older. One thing that makes life so difficult to live is when debt accrues. Debt is commonly accrued when buying a car, a home or going to school. It can also be accrued through unpaid medical bills, unpaid utility bills and through the use of credit cards.

Unsecured debt is defined as any type of loan you acquire that is not backed by some type of asset. For example, a secured debt would be your mortgage. The mortgage is backed by your home, an asset. If you fail to pay your mortgage, the financial institution will take possession of your home.

The most common type of unsecured debt is that of credit card debt. When you apply for a credit card, you do so without having to put up any form of collateral for the "loan." You are approved or denied based on your credit score and history. This information will also help determine how much of a limit you are provided on each card.

Because the lender assumes much greater risk with unsecured debt, you will face higher interest rates than on a car loan or mortgage. The most common, and quickest, way to get rid of your unsecured debt is to file Chapter 11 bankruptcy in New Hampshire.

Are you stuck under a pile of debt? Are you having trouble making even just the minimum payments each month? An experienced Chapter 11 bankruptcy attorney in Nashua can help you determine the best course of action for your situation.

Source: Investopedia, "Unsecured Debt," accessed Sep. 08, 2017

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