Facts about Unsecured Debt

If you would like a credit card consolidation loan, you'll want to make sure your debts are unsecured before you apply. Find out what unsecured debt is here.

Definition of Unsecured Debts

You will often hear consolidation companies and lenders talk about unsecured debts. This term refers to loans that are not secured against any physical item. That means the loan has no claim on your property. With unsecured debts, you are obligated to repay them, and creditors may take legal action to collect them, if necessary. However, the creditors cannot seize property for unsecured debts like they could with secured debts. The most extreme action creditors can take with unsecured debts it to get a judgment against you to garnish your wages. If you are in danger of having this happen to you, a credit card consolidation loan might be able to help. Conversely, secured debt includes things like mortgages or car loans, which are ineligible for a credit card consolidation loan and most debt consolidation services. The main types of unsecured debts are:

• Credit cards
• Medical bills
• Personal loans without collateral
• Debt consolidation loans not tied to your home
• Student loans
• Past utility/phone bills for which the service has already been disconnected.