A simple example
If someone borrows A$8,000 without offering an asset as security, the loan is still part of their debt picture. With A$6,500 outstanding, that current amount belongs in the liability record.
What to keep in your records
Keep the borrower, lender, outstanding balance, rate, fees and repayment schedule together. Mark security accurately instead of linking a loan to an asset simply because its proceeds paid for that asset.
A common mix-up
Unsecured does not mean optional repayment or no consequences for default. It describes the security arrangement, not whether the debt is enforceable. Read ASIC Moneysmart’s explanation.
