Unsecured debt is a type of loan that isn’t backed with underlying assets. Examples of unsecured debt include:
- Credit Card Debt
- Medical Bills
- Utility Bills
- Other Loans Without a Collateral Requirement
Unsecured debt is a major risk for lenders because they have to sue to seek repayment if the borrower doesn’t pay off what they owe. Because of the high risk, unsecured debts often have high interest rates. Unsecured debt can also be wiped away by filing for bankruptcy.
What’s the Difference Between Secured & Unsecured Debt?
Secured debts are back by assets, like real estate property or a vehicle. The assets that back the loan are known as collateral. If a borrower defaults on a secured loan, the lender can collect the collateral. The following are examples of secured debt:
- Mortgages
- Title Loans
Because there is less risk for the lender with this type of loan, interest rates are usually lower than unsecured loans.
How Is Unsecured Debt Collected?
If you are unable to make payments on your unsecured debt, your creditor will attempt to contact you to get their payments. If you cannot set up a repayment agreement with the lender, your account will be sent to a collection agency and a lawsuit will be filed against you.
Debt Collection Defense
The Fair Debt Collection Practices Act (FDCPA) protects consumers from being harassed by debt collectors. If you are being hounded by creditors over your secured or unsecured debts, you should immediately get in touch with our experienced team of attorneys to discuss all of your options under the law.
At Atlas Consumer Law, we are committed to defending clients and protecting their consumer rights. We are familiar with the FDCPA and we have years of experience handling debt collection cases. We can review the details of your case and build a strong legal strategy that will allow you to secure the justice you deserve.
Call (312) 313-1613 today to set up your free case evaluation with a Chicago consumer law attorney.