In finance, unsecured debt refers to any type of debt or general obligation that is not collateralized (guaranteed) by a lien (legal claim or a “hold” ) on specific assets of the borrower in the case of a bankruptcy or liquidation.
In the event of the bankruptcy of the borrower, the unsecured lenders will have a general claim on the assets of the borrower after the specific pledged assets have been assigned to the secured creditors, although the unsecured creditors will usually realize a smaller proportion of their claims than the secured creditors.
In our case, the unsecured debt is the credit card debt accumulated by the card holder. Since most credit cards are not asking for any collateral (although rare, the option exists to ask for savings accounts to secure a CC), this qualifies credit card debt as unsecured. Since individuals do not file for bankruptcy often, the card issuer must find alternate ways to recover the debt – most often by pressuring the debtor with penalties and hurting his credit score for skipped or delayed payments.
This simple definition of unsecured debt offers us the base for negotiating down credit card debt – you will learn to use a few simple methods to qualify the willingness of your lender to reach a new agreement, tips about how far the other party would go and ultimately how to partner with reliable professionals that can validate and help you seal the deal.
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