Unsecured Creditor is an entity that may be an individual or an institution that does not acquire any particular asset as collateral when lending money. This means that the creditor is at a high risk due to the fact that if in the event that the transaction fails, for example the borrower does not have the capacity to pay back the loan, the creditor has nothing to fall back on. An example of unsecured creditor is a debenture holder.
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