Browse terms
Debts and discharge
Unsecured claim
In bankruptcy, an unsecured claim is a claim for which the creditor holds no security, such as a mortgage or lien. 1
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With an unsecured claim, the creditor generally has no special right to collect against any particular property of the debtor. Credit card and medical debts are examples. 2 3
Part of a secured debt can be unsecured as well. When collateral is worth less than the debt, the claim is secured up to the value of the collateral and unsecured for the rest. 4
Some unsecured claims rank ahead of others. A priority claim is an unsecured claim that is entitled to be paid before unsecured claims with lower priority or none. Most taxes and the costs of the bankruptcy proceeding are examples of claims with that special status. 1 2
In Chapter 13, the plan need not pay unsecured claims in full, as long as the debtor pays all projected disposable income over the applicable commitment period and unsecured creditors receive at least as much as they would in a Chapter 7 liquidation. 2
What it covers
| Type of claim | What it means | Examples |
|---|---|---|
| Secured claim 2 1 | The creditor can take back particular property, the collateral, if the debtor does not pay 2 1 | Mortgage, car loan 2 1 |
| Undersecured claim 4 1 | Secured up to the value of the collateral and unsecured for the rest 4 1 | A car loan larger than the car's value 4 1 |
| Priority unsecured claim 1 2 | No collateral, but paid ahead of unsecured claims with lower priority or none 1 2 | Most taxes, costs of the bankruptcy case 1 2 |
| Unsecured claim with no priority 2 3 | No collateral and no special status 2 3 | Credit card and medical debt 2 3 |
Common questions
Do unsecured creditors get paid in Chapter 7?
Are all unsecured claims treated the same?
No. Priority claims are paid ahead of other unsecured claims. 1
Sources
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