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 New Jersey, 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 without first going through legal processes. Common examples of unsecured debt include credit card debt, medical bills, and personal loans. Creditors may attempt to collect on these debts through collection calls, letters, and, if necessary, by filing a lawsuit. If a creditor obtains a court judgment against a debtor, they may then seek to garnish wages, levy bank accounts, or place liens on property. However, there are state and federal laws that provide certain protections for debtors, such as exemption limits on wage garnishment and restrictions on harassing collection practices under the Fair Debt Collection Practices Act (FDCPA).