Unsecured creditor

Unsecured creditor,

Definition of Unsecured creditor:

  1. An unsecured creditor is an individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because it will have nothing to fall back on should the borrower default on the loan. If a borrower fails to make a payment on a debt that is unsecured, the creditor cannot take any of the borrower's assets without winning a lawsuit first.

  2. Creditor who extended credit to a debtor without a collateral security. If the debtor files for bankruptcy or is levied upon, the unsecured creditors are paid on a pro-rata basis only after the claims of all secured creditors are satisfied.

  3. A debenture holder is an unsecured creditor.

How to use Unsecured creditor in a sentence?

  1. Usually, bankruptcy is the only option for unsecured creditors if the borrower defaults.
  2. Secured creditors often require collateral in the event the borrower defaults.
  3. Unsecured creditors can range from credit card companies to doctor's offices.

Meaning of Unsecured creditor & Unsecured creditor Definition