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 Rhode Island, 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. Creditors may still pursue repayment of unsecured debts through legal means such as filing 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, the process to collect on unsecured debt is generally more complex and time-consuming than for secured debt. It's important to note that while unsecured creditors cannot immediately take property without a court judgment, they may report delinquencies to credit bureaus, which can negatively affect the borrower's credit score.