General Question

mickhock's avatar

Can credit card companies take your home ?

Asked by mickhock (540points) September 29th, 2010

If you owe money on credit cards and do not have the means to make minimum payment what can the companies do to retrieve their money ?
Is it possible that they can make you sell your home to pay the outstanding debt ?

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16 Answers

Tropical_Willie's avatar

What does your latest credit agreement with the Credit Card company say?
The fine print may say that they can seize any items purchased on their card. Or if the amount is large and you have no other assets they could force you into bankruptcy.

everephebe's avatar

No. That isn’t a form of legal tender. Of course technically neither is credit, in a fiat based economy. There are many resources for you, but the best might be studying the law and knowing your own rights. I wish I could help you further but I don’t know the best place to start.

marinelife's avatar

Before it got to that point, you would have to declare bankruptcy. The bankruptcy court would most likely protect your home.

CMaz's avatar

No. They can’t.

They can garnish your wages. But if it gets to that point. Bankruptcy is the way to go.
Get a fresh start.
The catch 22 is you have to come up with $2,000. Otherwise your creditors will bleed you dry.

Can’t take your home can’t take your car.

On the other side. If your home is payed off or car. Bankruptcy court will want you to sell your home (or car) to pay off your debt. If you choose to go that way.

wgallios's avatar

I would suggest you homestead your house. This will help protect it against any forced sales by creditors.

john65pennington's avatar

How about this situation: a friend of mine borrowed $500 cash on his credit card. he could not pay it back and notified the credit card company. the card company notifies a local attorney and slaps a lien on his house for the $500.00. anyone care to explain this?

I don’t believe the card company could take his house for $500 dollars, but this could prevent him from selling his house, until the debt is paid.

CMaz's avatar

Lien does not mean taking away of home.
Does not matter. Once filing bankruptcy that all goes away.

And, homesteading is a good idea.

snowberry's avatar

@Mickhock, Dave Ramsey with Financial Peace University knows the law regarding credit cards. Nobody decides that you are a deadbeat; it’s a computer that does. To stay out of the deadbeat file, call the card company every month or even more often and tell them the details of your current financial situation. This means give them your current income (don’t lie or exaggerate) and tell them your priorities regarding finances (food shelter, transportation, and utilities are necessary to you being able to search for a job, or keep the one you have). Then tell them when you plan to start paying them back. Call them every month, or more often, and don’t be late. Follow up with a document (every month) with the details. As soon as you have the funds to begin paying, do so. If you get in a jam again, do as before.

The truth is, they have no category for someone who behaves like the above.

It works!

Blueroses's avatar

@john65pennington I believe the lien on your friend’s house only means that should your friend decide to sell his home, the credit company is entitled to $500 from the profits of the sale, if there is any profit.

Adirondackwannabe's avatar

The credit card can call the loan and if you can’t pay they can go to court and get a judgement against you for the anmount of the debt plus their expenses. The judgement is a legal claim against your assets, including the house. If they think there is value in the house over and above other legal claims against the house, like a mortgage or home equity loan they can pursue an action to force the sale of the house through the courts. The priority of the claims against the house is determined by who filed their claim first. So the credit card company can force a sale subject to the other claims.

diavolobella's avatar

If the credit card company obtains a judgment in a court of record, they can then file a judgment lien against the home. The trick is the part about there needing to be value in the house over and above the other legal claims, because the mortgage company or home equity lender will have priority over unsecured creditors. The priority of claims is only determined on a “first-come, first-served” basis in the case of unsecured creditors, such as the credit card company. Secured creditors such as the mortgage company or contractors with a materialmen’s lien come first.

For the most part, it is not worth the expense and trouble for a credit card company to force the sale of the home for this reason. Most people have a mortgage and the amount of money left over after the mortgage lender and other secured creditors are paid and the attorney’s fees and court costs are deducted isn’t worth the trouble to the credit card company. Usually in a situation like that the attorney holding the sale ends up at the courthouse with a couple of dudes hoping to pick up a house for next to nothing and a representative from the credit card company standing there looking blank. That’s why this scenario rarely happens, even though it is possible. The last thing the credit card company wants is a house. They just want to be paid. Therefore, a credit card company would be a lot more likely to pursue this option against a debtor whose house is paid for. No secured creditor to compete with.

A lot of times, rather than pursuing the enforcement of the judgment lien, the credit card company will simply wait until the debtor tries to sell or refinance the house. At that point the title company will see the lien and the debtor will be forced to deal with the credit card company.

A common way to avoid being forced to sell is to file bankruptcy and sign a Reaffirmation Agreement with the mortgage company.

earthduzt's avatar

Don’t ever file bankruptcy over credit card debt. If you cannot pay, then just don’t pay..yes you will be hounded but eventually they will sell your debt to a collection agency for pennies on the dollar. Once they sell your debt then you will be hounded by the scum of the Earth collectors, they will try and push your buttons and play with your emotions, be strong and then offer to pay them X amount…9 times out of 10 they will settle with you, because they bought that debt cheap anyways. DO NOT ever give them access to your bank and when they do decide to settle with you get it in writing first before you send them any money and hang on to that forever. Yes your credit will be bad, but it’s a whole lot better than having a bankruptcy or foreclosure or repossession on your credit.

Dave Ramsey is amazing

diavolobella's avatar

I’m not advocating filing bankruptcy but you should never take the position never to file bankruptcy over credit card debt. The OP asked if a credit card company can make you sell your home and the answer is yes. Once they choose to do that and refuse to negotiate further with you, filing bankruptcy is the only way to avoid it. If you have reached the point that they have actually chosen to force a sale, you are well beyond the point at which they are going to sell your debt and send a collection agency after you. They generally only sell credit card debt to collection agencies when the debt is relatively small. Bankruptcy shouldn’t be your first resort and certainly not when your credit card debt is not that large, but in the case of the impending forced sale of your home, it would be a last ditch effort to save your home.

mickhock's avatar

Fluthers a pretty good place to hang, thanks everyone.

CMaz's avatar

“Don’t ever file bankruptcy over credit card debt.”

That is a misconception that people need to get over. More of an ego thing.

If you do not file, and you can’t pay off the debt. You will have your wages garnished. Not only for the debt that includes all that jacked up interest, late fees and overage fees. But, court costs, lawyer costs and additional interest. On top of the possibility of leans. Also, the debt you are being garnished for will show up as a negative on your credit history for years. Cash going out to pay these debts off means no money to establish new credit. If you choose to go that way.

IT WILL prevent you from establishing new credit for years, it taking years just to get it payed off.

Bankruptcy will save you thousands of dollars and it will all be over in a few months.
Also, it is a Constitutional right.

And a bankruptcy on your credit history is not a bad thing. It is seen as NO DEBT. AND, you are a safer risk because you can’t file bankruptcy again for 10 years. A good bad thing.

Also, within two years your credit will be back up to normal. Where the other option, you will still be 25% less of income from the garnishment.

I have “discovered” for the most part you do not need credit. Credit cards are all scams.
Live within your means, and only spend money you have.

Never a lender or borrower be.

snowberry's avatar

And if you choose to file bankrupcy, DO NOT have the money taken out of your account automatically. The attorney will continue pulling from your account for many months AFTER the bankruptcy has been fulfilled and discharged. When you make a stink about it, the attorney will charge you again for calling them-or even writing them a letter, and taking up their time for making them stop pulling your money from your account.

Beware! Bankruptcy attorneys are scam artists too! I should know. I learned the hard way!!

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