In terms of obligations, what distinguishes unsecured debt?

Unsecured debt is defined by the fact that it does not involve any collateral backing the borrower's promise to repay. In this context, the borrower's commitment to fulfill the repayment obligations is the sole security for the lender. This means that if the borrower fails to make payments, the lender has no specific asset they can claim to recover their funds. The lack of collateral makes unsecured debt inherently riskier for lenders, which often results in higher interest rates compared to secured debt.

Collateral refers to an asset that a borrower offers to a lender to secure a loan, providing assurance that the lender can recuperate the funds if the borrower defaults. Since unsecured debt lacks this feature, the other options concerning collateral and guarantees do not apply. The interest rates associated with unsecured debt can vary widely but are not a defining characteristic of unsecured debt itself, making those options irrelevant when identifying what distinguishes this type of debt.