Unsecured Creditor
A creditor owed money without any security over the debtor's property, ranking behind secured and priority creditors in an insolvency.
No security held
An unsecured creditor is owed money but holds no security interest over the debtor's property. Many trade suppliers and service providers are unsecured creditors. Because there is no specific asset they can call on, unsecured creditors rely on the general pool of funds available in an insolvency and typically rank behind both secured creditors and certain priority creditors.
Prospects of recovery
In a liquidation or bankruptcy, unsecured creditors share whatever remains after higher-ranking claims are met, so returns can be limited or nil. Lodging a clear proof of debt and acting early both help. This is general information only and not legal or financial advice. If you are an unsecured creditor chasing payment, you can refer a debt to review your options.
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