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.

Unsecured Debt Types, Debt Settlement