What is Unsecured Debt?
Unsecured debt is defined as debt that does not have collateral backing it. The collateral acts as a form of security to the lender, backing the debt and able to be repossessed in the case of non-repayment from the loan borrower.
Unsecured loans that are not backed by assets, such as a car or house, tend to have higher interest rates when compared to secured loans because they pose a higher risk to the lender.
Examples of Unsecured Debt
Common examples of unsecured debt include:
- Credit card debt
- Medical bills
- Utility bills
- Student loans
- Income taxes
What kind of debts can be settled?
Debt Settlement programs focus on unsecured debts – those that are not tied to a physical asset such as a house, car or boat. In addition, some types of unsecured debt also do not qualify.
You can include the following types of debt in a New Era Debt Settlement Program:
- Credit cards
- Department store cards
- Signature loans
- Personal lines of credit
- Old repossessions
- Other unsecured debts
- Old judgments
- Private student loans in default
The following types of debt do not qualify:
- Home mortgages
- Federal student loans
- Car loans
- Other secured debts
- Credit Union debts
This list is not all-inclusive. Be sure to check with your New Era debt counselor.
