True or False: An unsecured creditor must begin a court action for recovery after demanding payment from a defaulting debtor.

An unsecured creditor typically must initiate a court action to recover debts once they have made a demand for payment and the debtor has failed to respond or fulfill the payment request. This process is necessary because, without security attached to the debt, the creditor does not have any legal claim to the debtor's property until a court has confirmed the validity of the debt through a judgment. By filing a court action, the creditor seeks to establish their right to collect the debt legally, which may lead to various enforcement options, such as garnishment or seizing assets once a judgment is secured.

Demanding payment alone does not automatically mean that recovery will occur without further legal steps. Therefore, stating that an unsecured creditor must begin a court action after making a payment demand is accurate, as it reflects the necessary steps in the debt recovery process for unsecured debts.