Unsecured Debt

Written By Melissa Cook
Feb 14, 2023
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Unsecured debt refers to a loan or debt that is not backed by collateral. 

Unlike secured debt, where the borrower provides collateral, such as property or assets, to secure the loan, unsecured debt is issued based on the creditworthiness and reputation of the borrower. 

In the event of default, unsecured creditors do not have a right to seize specific assets, but instead, must rely on the legal system to recoup their losses.

Common examples of unsecured debt include credit card debt, personal loans, medical bills, and student loans. These types of debt are considered unsecured because the lender does not have a direct claim to the borrower’s assets in the event of default.

One of the benefits of unsecured debt is that it is often easier to obtain than secured debt. 

Since the lender does not have to worry about the risk of repossession, they may be more likely to approve the loan. Additionally, unsecured debt is often more flexible and can be used for a variety of purposes, such as paying off bills, making home improvements, or covering unexpected expenses.

However, unsecured debt also has its drawbacks. 

Since the lender is taking on more risk, the interest rates on unsecured debt are often higher than those of secured debt. Furthermore, if a borrower defaults on their unsecured debt, their credit score can suffer, making it more difficult to obtain future loans or credit.

In the event of a financial crisis or bankruptcy, unsecured debt is often one of the last types of debt to be paid back. This is because unsecured creditors do not have a direct claim to the borrower’s assets and must rely on the legal system to recoup their losses.

It’s important for borrowers to be mindful of their unsecured debt and to only take on what they can afford to pay back. This can help prevent default and minimize the risk of damaging their credit score. 

Additionally, paying off unsecured debt on time and in full can help improve a borrower’s credit score and increase their overall financial stability.


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We provide debt resolution services. Our clients who make all monthly program payments save approximately 40 – 50% of their enrolled debt (average of 43%) upon successful program completion, before program fees. Fees are based on a percentage of your enrolled debt at the time of starting the program and range from 15%-25% of your enrolled debt. Programs range from 20-48 months. Clients must save at least 25% of each debt due to an enrolled creditor before a bona fide settlement offer will be made. On average, clients receive their first settlement within 4-7 months of enrollment and approximately every 3-6 months thereafter from when the prior debt was settled. Not all Clients complete the program. Estimates are based on prior results and may not match your results. We cannot guarantee that your debts will be resolved for a specific amount or percentage or within a specific timeframe. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting, legal advice or credit repair services. Our program is not available in all states; fees may vary by state. Some programs may be offered through The Law Firm of Higbee & Associates d/b/a Advantage Law. The use of debt resolution services will likely adversely affect your credit. You may be subject to collections or lawsuits by creditors or collectors. Your outstanding debt may increase from the accrual of fees and interest. Any amount of debt forgiven by your creditors may be subject to income tax. Clients may withdraw from the program at any time without penalty and receive all funds from their dedicated account, other than funds earned by the company or fees paid to third-party service providers, as may be applicable. Read and understand all program materials prior to enrolling. Certain types of debts are not eligible for enrollment. Some creditors are not eligible for enrollment because they do not negotiate with debt relief companies. To determine the offers you may be eligible for, Americor conducts a “soft credit pull.” This credit pull does not impact your credit score, creditworthiness, or ability to obtain credit from other sources. The soft pull is not a tradeline entry, it does not report against your score and will only take a few minutes.

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