Undersecured Claim Law and Legal Definition

An undersecured claim is a debt secured by property whose value is less than the original amount of debt. For example, when a brand new vehicle is purchased with 100 per cent financing, such a debt is called the undersecured claim. Reason for calling such a debt as undersecured claim is that as soon as the car is purchased, the value of the car gets reduced as it becomes a used vehicle. Undersecured debt involves risk because full realization of the debt from the property is not possible.