Page 20 - Book1E

EXAMPLES OF UNSECURED DEBT
• Credit card purchases
• Credit card cash advances
• Gasoline and department store charges
• Loans from friends and relatives
• Medical and dental bills
• Accountants’ and lawyers’ fees
• Dues and team fees (e.g., church, synagogue, health club, union dues, Little League, team sports)
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Secured and Unsecured Debt
is a positive recovery step for consumers who have gotten into credit problems and need to rebuild their credit.
Unsecured Debt
In contrast to secured debt, unsecured debt is not backed by or guaran- teed by any form of collateral. Unsecured loans, such as credit cards, are typically given to people who have good credit. However, many credit card companies are once again mailing offers for credit cards to people who have filed for bankruptcy or have a poor credit rating. It’s hard to believe, but it’s true.
Most debts that people incur are unsecured debts. Having unsecured debt is the weakest position you can be in during tough financial times. The bank that made the loan has nothing to take if you don’t pay. But the bank can sue you, get a judgment for the money you owe, and try to collect on it. To collect on the judgment, the bank can target a por- tion of your wages, your savings accounts, and other property that can be taken under your state’s laws to satisfy the judgment.
You should also know the difference between installment credit and non-installment credit. Both can be secured or unsecured. Installment