What is an unsecured creditor?
Unsecured creditor is a creditor who lent money to the debtor without receiving the collateral for the loan. The collateral refers to a tangible piece of property with a value that guarantees a loan. The creditors usually have a difficult time to obtain money lent if the debtor declares bankruptcy or failure and does not pay his debt, as the entitlement of an unsecured creditor is less value than the creditor's claim that lent money for secured debts. Collateral is a tangible item that can be sold to obtain an unpaid loan balance. For example, a mortgage loan and a car loan are secured by debt because home and car act as a collateral for money loans.
In general, the secure debt has a lower interest rate than unsecured debt, the secured debt NCE is less risky for the creditors. The creditor may also require certain forms of protection if the value of the collateral drops of ZajIsti to ensure that the item guarantees the full value of the loan. For example, if a person puts less than 20 percent per house and has no capital, the creditor may require the owner of the house to pay private mortgages in case of failure. Similarly, the creditor who lends money for a car may require the debtor to buy the space of the gaps that he pays to the creditor if something happens, and the insurance value does not completely cover the loan.
Unsecured creditor, on the other hand, has nothing to guarantee the money he lent because there is nothing to sell. The most common example of unsecured debt with which people are familiar with are credit cards. For example, the debtor can charge $ 1,000 (USD) pizza and soda on his credit card.
If the debtor does not pay the creditor, the unsecured Credititor cannot repossiss and sells the pizza and soda that has been consumed. As a result, the unsecured creditor has only the word of the debtor to pay, and little for not doing so except for court proceedings. EvenThe action does not have to provide the creditor with great protection if the plaintiff is evidence of the judgment, which means that he has no assets to pay, even if he loses a court case, or if a person declares bankruptcy, because unsecured debts are generally low on the list of people paid if bankruptcy.