Unsecured Credit
A loan in which no security interest is held. The creditor accepts an individual’s promise to repay the loan based on past history and capacity to repay.
The advantage is there are no assets to be seized by the creditor if a default occurs. The disadvantage is that the interest rate is generally significantly higher since the creditor takes a greater risk of loss in this type of transaction.
This is a complicated area of law and an attorney should be consulted on all matters relating to bankruptcy. The information on this website is provided with the understanding that the authors and publishers are not herein engaged in rendering bankruptcy, legal, insolvency, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional bankruptcy, insolvency, tax, legal or other competent advisors. While we have made every attempt to ensure that the information contained in this website has been obtained from reliable sources, Credit Advisors Foundation and Arbor Investment are not responsible for any errors or omissions, or for the results obtained from the use of this information.