Unsecured debt
An unsecured debt is borrowing that is not tied to an asset, so the lender cannot automatically take your home or car if you do not repay.
Also known as: unsecured debts, unsecured loan
Credit cards, overdrafts, personal loans, store cards, catalogue accounts and most bills are unsecured. If you fall behind, the creditor can chase you, record a default on your credit file and apply to court for a county court judgment. A judgment can lead to further enforcement, such as a charging order on your home.
Because unsecured creditors have fewer powers than secured creditors, they are generally dealt with after priority debts. Several formal and informal solutions, such as debt management plans and IVAs, are designed for unsecured debts.
Related terms
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