Unsecured Debt

Unsecured loans are often seen as an attractive option for borrowers because they aren’t backed by collateral, meaning your car or home can’t be seized if you find yourself unable to make repayments as originally agreed. However, this doesn’t mean your creditor can’t resort to other forms of legal action to recover what they are owed.

In this guide, we’ll take an in-depth look at various types of unsecured debt and what can happen if you don’t pay.


When you take on unsecured debt it means that it isn’t secured against an asset or covered by a guarantor.

As such, if you fail to make repayments the loan company will not be allowed to attempt to repossess assets in a bit to recoup what is owed.

What is unsecured debt?

As mentioned above, unsecured debt is debt that isn’t linked to any asset you own. This means that if you fail to keep on top of payments, you don’t run the risk of losing your home or vehicle, for example, nor will a guarantor be held responsible for your debt.

Unsecured debt isn’t considered to be a priority debt, which can make it all the more tempting to ignore when cash is a little tight one month.

However, it’s important to remember that living with the stress of unpaid debts can cost you more than your assets – it can cost your mental health and have a serious impact on daily life.

Why choose Talk About Debt?

  • Write off unsecured debt over £6,000
  • Stop interest and charges soaring
  • Reduced payments from £100 per month

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What debts are unsecured?

Unsecured debt is one of the most popular types of debt in the UK. Ranging from credit cards and payday loans to gambling debt, thousands of people across the country struggle to keep up with the cost of unsecured debt.

As well as personal debts, unsecured debt can also be associated with a business you run.

Here we shine a light on various types of unsecured debt.

  • Credit cards: Credit card debt is the most common type of debt in the UK, with Brits owing an average of £2,603 per household in September 2019. There’s no denying the allure of the buy now, pay later aspect of credit cards and they can prove to be incredibly valuable should you ever face an unexpected expense. However, you should always be wary before splashing out on the plastic as debts and interest can quickly add up, making it hard to stay on top of what you owe.  In fact, industry figures show that it would take an incredible 26 years and nine months to repay the average UK credit card debt by making only the minimum payment – highlighting the importance of not getting caught up in the credit card debt trap.
  • Payday loans: Making it from one payday to the next just isn’t a possibility for many people across the country and thousands find themselves forced to turn to payday loans for support. Payday loans are advertised and designed to give an impression of hassle-free lending, however, the reality often couldn’t be further from the truth. High-interest rates and short repayment schedules make it easy to fall behind on payments and can make your financial situation worse.
  • Utility bills: Covering the cost of everyday essentials such as gas, electricity and water comes as second nature for most people, but for others, it can be a cause of financial despair. Past due bills make up a huge proportion of unsecured debt in the UK with thousands of people struggling to stay on top of their monthly or weekly bills. Unavoidable price hikes by suppliers are often to blame for people falling behind but even something as simple as misplacing a bill can have a serious impact on a person’s financial situation.
  • Gambling: Chasing lady luck with a flutter on the horses or placing a bet on your local football team can seem all fun and games for the most part, however, gambling debt can quickly spiral out of control if you don’t keep a close eye on your bank balance. Losses can quickly outnumber wins and at this point can have a serious impact on your mental health as well as your finances. Cutting back on everyday items to funding any bets with credit cards or loans are a sign that you should consider seeking help for your gambling.
  • Student loans: There is often the misconception that students have a wealth of disposable cash and don’t need to concern themselves about their spending thanks to the safety net of their student loan. However, the reality is a student loan is just that – a loan – and something that you will be required to repay in full. It’s important to take this into account when considering how much to borrow in the first instance and, of course, when setting up your monthly budget following graduation.

If you’re struggling with unsecured debt and are searching for free, confidential advice talk to TAD – our resident debt expert.

How we helped Sarah

The process was really clear and the team explained everything that I needed to know in order to make the right decision. They were very understanding and made me feel at ease”

Sarah, London

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Key Takeaways

Unsecured debt refers to missed payments on a loan that is not backed by any major assets, such as a property or vehicle

Examples of unsecured debt include credit cards, payday loans, and utility bills

Both personal and business debts can be unsecured

Unsecured debt is a non-priority debt which means the consequences aren't as serious as they are for priority debts like council tax and mortgage arrears

Your creditor can't seize your assets if you have missed payments but they can take legal action against you to force you to repay what you owe