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Are Credit Cards Unsecured Debt?

Not all credit cards are unsecured. There are secured credit cards, which are backed by an initial deposit. The deposit is equal to the spending limit on the card. Late payments are still reported to credit bureaus, and the bank will keep the deposit if you default. Learn more about credit card debt. With unsecured debts, lenders don’t have rights to any collateral for the debt. If you fall behind on your payments, they generally cannot take any of your assets for the debt. Unsecured debt includes credit card debt, medical bills, utility bills and other types of loans or credit that were extended without a collateral requirement. This type of debt presents a high risk for lenders, also referred to as the creditor, since they may have to sue for repayment if the borrower doesn’t repay the full amount owed. An unsecured debt is an obligation or debt that does not have specific property—like your house or car—serving as collateral for payment of the debt. If you fail to make payment on an unsecured debt, the creditor can’t take any of your property without first suing you and getting a court judgment (subject to a few exceptions). A lot of your debt, like credit card debt, is probably unsecured, which means that the creditors do not have liens on any of your assets. If you don’t pay an unsecured debt, the creditor will try to get you to pay. In most instances, credit card debt is unsecured. This means that the credit card company cannot take anything from you without first getting a court judgment. However, some credit card debt is secured. (To learn about the difference between secured and unsecured debt, see What Is a Secured Debt .

Debt comes in two varieties: secured and unsecured. In most cases, you don’t get a choice between the two: The type of debt is determined by the type of loan you’re applying for. Still, it pays to Unsecured debt includes credit card debt, medical bills, utility bills and any other type of credit that was extended without collateral. When a loan is backed by collateral, such as a house or car, it’s known as secured debt. Unsecured debt can be wiped out by bankruptcy. In finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, or collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment. That differs from secured debt such as a mortgage, which is backed by a piece of real estate. What happens to credit card debt after death The state, terms dictate who owes, what must be paid .

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