Unsecured claim definition
/What is an 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. These claims are reported to the bankruptcy court on a proof of claim form. Creditors state on the form a description of the debt , its amount, and whether it is a secured or unsecured debt.
Examples of Unsecured Claims
Examples of unsecured claims are credit card debt, rent, and utility bills.
