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When I have an unsecured line of credit, it is not backed by any assets I hold (e.g:car). So if I fail to pay it back because I lose my job, how will the bank get its money back?

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up vote 10 down vote accepted

The bank will sell your debt to a collection agency, that will then follow you everywhere you go and demand payment. They will put a negative notice on your credit report preventing you from getting any new credit, and might sue you in court and take over some or all of your assets through court judgement.

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Ok if they are able to take over my assets, then how is it 'unsecured'. I did not secure my line of credit with any assets. Thank you for the response. – Victor123 Feb 13 '13 at 21:26
@Kaushik for secured loan they can take the asset used to secure the loan, and they don't need court judgement. – littleadv Feb 13 '13 at 21:33

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