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 North Carolina, unsecured debt refers to obligations that do not have collateral attached to them. This means that if a borrower defaults on the debt, the creditor does not have an immediate right to seize any specific property to satisfy the debt. Common examples of unsecured debt include credit card debt, medical bills, and personal loans. When a debtor fails to pay an unsecured debt, the creditor may attempt to collect the debt through phone calls, letters, and eventually may file a lawsuit. If the creditor wins the lawsuit, they may obtain a judgment which can lead to wage garnishment, bank account levies, or liens on property. However, North Carolina has strong debtor protection laws, including exemption statutes that protect certain property from creditors and limitations on wage garnishment. It's important to note that while unsecured creditors cannot immediately take property without a court judgment, they can pursue legal action to satisfy the debt, and if successful, use the judgment to attach to assets or income.