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You know you need life insurance, but how much and what kind? Get personalized answers from Nelsonomics creator Danny Nelson with a Life Insurance Blueprint.
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** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
An unsecured debt is a loan or financial obligation that is not backed by any collateral, meaning the lender has no specific asset to claim if the borrower defaults.
Instead, approval relies on the borrower's credit history, income, and overall financial stability, making it riskier for lenders.
Common examples include credit card debt, personal loans, student loans, and medical bills.
Due to the higher risk, unsecured debts often come with higher interest rates and stricter qualification criteria compared to secured debts.
In case of non-payment, lenders may pursue legal action, such as lawsuits or wage garnishment, to recover the amount owed, but they cannot directly seize property.