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Understanding Unsecured Debt

Unsecured debt represents a debt where no form of collateral is provided by the borrower as security to the lender for repayment of the loan. Common examples of unsecured debt are where:

  • Monies have been advanced or goods have been provided to an individual under a line of credit, bank overdraft or credit card; or
  • Services have been rendered to an individual in the form of utilities, cellular telephone services; or
  • Services are provided by government for which the individual is required to pay income tax or goods and services tax.


Generally, unsecured debts originate when an individual receives monies, goods or services pursuant to a written or verbal contractual promise to provide payment at a future date.


In a consumer proposal or personal bankruptcy debt restructuring plan, all of your unsecured debts are included in the restructuring plan, and you are no longer required to make payments to the individual creditors. Furthermore, you receive immediate protection against any further collection or legal action by the creditor for the recovery of the unsecured debt.

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