Unsecured debt is debt that is not secured or collateralized by specific assets that the lender or creditor may attach if you fail to repay the debt. For example, your credit card is an unsecured line of credit.
In Delaware, unsecured debt refers to obligations that do not have collateral attached to them. This means that if a borrower defaults on the debt, the lender cannot claim specific assets directly as repayment. Credit cards, personal loans, and medical bills are common examples of unsecured debt. When a borrower fails to repay unsecured debt, creditors may attempt to collect the debt through collection agencies, court judgments, or wage garnishments. However, they must first file a lawsuit and obtain a court judgment to proceed with these actions. Delaware's statute of limitations for filing a lawsuit on unsecured debt is typically 3 years from the date of the last payment or acknowledgment of the debt. If a creditor wins a judgment, they may then take further legal action to collect the debt, such as garnishing wages or levying bank accounts, within the bounds of state and federal law.