Unsecured claim

An unsecured claim is a liability for which there is no collateral. Instead, credit was extended solely based on the creditor’s evaluation of the debtor’s ability to pay. When a debtor enters Chapter 11 bankruptcy protection, unsecured claims do not receive priority for payment. Instead, these claims are only paid after all secured claims have been settled. Examples of unsecured claims are credit card debt, rent, and utility bills.

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Corporate Bankruptcy