undersecured claim
- A claim in which the collateral's worth is less than the owed debt
- The mortgage on the house was an undersecured claim as the house's market value was lower than the remaining mortgage balance.
- Bob filed for bankruptcy and his car loan turned into an undersecured claim since the car's value was lower than the amount he still owed.
- After the market crash, many investors faced undersecured claims as the properties secured were no longer valuable enough to cover the loan amount.
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