Unsecured Debt Help & Advice


While it’s necessary for most people to take on a certain level of debt in order to move forward with their lives, it’s important to understand what type of debt you’re taking on – and especially whether that debt is secured or unsecured.

In this guide we’re looking at unsecured debt, and exploring what it means, the difference between debts that are secured and unsecured, and where you can get debt help if you’re struggling to repay unsecured loans.



What is unsecured debt?

An unsecured debt is a debt that is not taken out against an asset or covered by a guarantor.

That means if you’re unable to repay the debt you owe, the people you owe money to cannot attempt to repossess any assets.

However, it’s important to be aware that there are several other ways failing to make repayment can cause problems, such as damaging your credit score.

When the bills begin to pile up and money worries begin to become a worry it can be difficult to know which debt to prioritise over others.

Write off up to 70% of your unsecured debt – Check if you qualify

What is the difference between secured debt and unsecured debt?

The main difference between secured and unsecured debt is that with secured debt, your liability is secured against an asset like your home or your car.

A common example of secured debt is a mortgage – you borrow money from a mortgage lender (your creditors, in this instance) and purchase your home over time through a series of monthly repayments. If you default on secured loan payments, it’s possible for the lender to seize your home as collateral.

People often tend to make more of an effort to repay secured debts – these are debts which have an asset attached such as a property – so they aren’t at risk of losing their assets.

However, failing to keep up with repayments on unsecured debts can be just as costly and can have a serious impact not only on your credit score but also day-to-day life and your mental wellbeing.

What types of debt are considered unsecured debts?

Unsecured debts can be either personal or business debts. Below are some common examples.

Credit cards

This is one of the most common types of unsecured debt across the UK. According to industry figures, the total average of credit card debt in the UK was £72.7bn in June 2019 – that’s an average debt level of £2,635 per household. Reports show that it would take 26 years and nine months to repay this staggering amount, making only the minimum repayments.

There is no denying that the buy now, pay later aspect of credit cards can be useful when faced with unexpected payments but if you find yourself turning to the plastic to cover the cost of everyday life, debts can quickly become unmanageable.

Payday loans

People who find themselves struggling with their finances or are beginning to find that their debts are unmanageable often turn to pay day loans to try and ease the burden.

These loans come with high interest rates and a short repayment schedule, making it all too easy to fall behind on what you owe and only worsen your financial situation.

Defaulted utility bills

Utility bill debt is another common type of debt around the UK. There’s no denying that everyone must find the cash to cover the cost of essential utilities such as electricity, gas and water but sometimes covering these bills an be easier said than done for some people.

Something as simple as misplacing a bill to an unavoidable price hike by your supplier can lead to financial problems.

Student loans debt

Scottish students are in the fortunate position that they don’t have to cover the cost of their tuition fees when studying in Scotland.

However, for many taking on a student loan could be the difference between being able to make it through higher education or not.

There’s often a misconception that students have more dispensable cash than they really do which is where dipping into student loans can cause issues.

Gambling debts

Compulsive gambling can have a major impact on day-to-day life, affecting both mental and financial health.

It’s no secret that a gambling addition can lead to serious money problems.

From being forced to cut back on essential items to being left without funds to cover the cost of bills, or funding necessities with an overdraft of credit card, are just some of the signs that your gambling habits are causing an issue.

A massive thank you

“I’d like to say a massive thank you to Carrington Dean for helping me. It feels like I have control of my life again.”

How do I keep on top of unsecured loan debt?

Although unsecured debt is common across the country, it’s important to understand that no one typically takes on debt they know they won’t be able to repay.

But life is unpredictable and can change in an instant, making a debt that was once manageable a struggle to repay.

That’s why it’s important to consider not only your current circumstances but also look to your future when considering taking on debt.

Planning ahead and ensuring that repayments fit into your weekly or monthly budget can help mitigate any future financial problems.

If you do run into trouble with unsecured debt, your first port of call should be contacting the loan company or lenders before you default on a payment.

The longer you avoid your situation, the more money you’ll owe.

Unpaid debts and defaulted payments will also be noted on your credit history for a period of six years, and will lower your credit score.

A poor credit rating will make it harder for you to approach lenders for a mortgage, an auto loan, and other forms of credit, and means you’ll pay higher interest rates for any loan you are accepted for.

Find out if you qualify to write off up to 70% of your unsecured debt!

Where can I get debt advice and more information on unsecured loans?

While an failing to repay an unsecured loan is unlikely to result in you losing assets like your home or car, it can be stressful having creditors chasing you for payments, and unsecured debt can still lead to serious financial consequences.

Should you find yourself struggling with debt, it’s important to know that help is at hand.

Carrington Dean is proud to offer a range of debt solutions to help you regain control of your debts, no matter how big they are.

Our friendly debt advisers will be happy to offer you their services, learn more about your circumstances, and help you pick the best debt relief option for you.

For free debt advice and non-judgmental support, call Carrington Dean today – our phone number is 0800 043 1320.