In addition, forcing the sale of debtors' homes would be extremely bad public relations, as many people would be much less likely to use credit cards if they thought their use may result in them to losing their homes.
Unless your financial situation is somewhat extraordinary, you probably do not need to worry about losing your home due to credit card debt. Only if you own your home outright, or if you have a very large amount of equity in the house, could the taking of your home become a concern. Even in those cases, it is extremely unusual for credit card companies to seize property due to the time and cost involved.
Credit card foreclosure
Before seizing any property, a credit card company would first need to file a lawsuit against you in your county courts in an attempt to obtain a judgment against you. The court process alone can take many months to complete, and there is no guarantee that the creditor will win a judgment against you, though it probably will win if you owe the debt. Once a creditor obtains a judgment, it can initiate further court proceedings to collect on the judgment.
Although the execution of a judgment could theoretically involve a creditor seizing your home, there are several much easier ways to collect on a judgment which creditors usually prefer. These methods include wage garnishment and levies on bank accounts. Also a creditor with a judgment against you will likely place a lien on your home, meaning that when (or if) you sell or refinance the home, you would be required to pay the judgment out of the proceeds of the sale.
Reasons why a creditor may not try to seize your home
If a creditor with a judgment against you wanted to seize you home, it would first be required to pay off any mortgages or home equity loans you have on the home. Only after paying off the secured creditors could the credit card company sell the home at auction. Since auctions frequently bring less than half of the actual value of the home, creditors are taking a huge risk. Since they must pay the mortgage company up front for the entire amount owed on the mortgage, if the home brings less than expected at mortgage, they can actually lose money on the deal.
In addition, almost all states exempt a certain portion of the equity in a home from creditor execution; this amount ranges from $5,000 in some states to several hundred thousand dollars in others. If a creditor sells your home at auction, they must pay you your exemption amount, regardless of whether or not the creditor made that much money at the sale.
As you can see, this is a complicated and risky proposition for creditors, which is why it is almost unheard of for a consumer to have his or her home seized to repay delinquent credit card debt. Some states, such as Texas, do not allow creditors to seize primary residences to repay judgments regardless of the amount of equity in the home.
If you are being sued by a creditor, or think that a lawsuit may be filed against you in the near future, you should consult with an attorney to discuss your states exemption laws and what action a creditor could take against you under those laws, and what you can do to protect yourself. After speaking with an attorney, some consumers find that they are "judgment proof," meaning they have no assets a creditor could take to repay a judgment against them. This is especially common among elderly and disabled individuals.
The bottom line is that, while possible legally in some states, it is unlikely a creditor will take your home to repay your credit card debts. However, as mentioned before, creditors will take other actions to collect on delinquent accounts, so you should look into ways to resolve your debts if you are struggling to repay them.
Debt resolution options
The first option that comes to many people's minds is bankruptcy -- if you are considering bankruptcy, I encourage you to consult with a qualified bankruptcy attorney in your area to find out if filing bankruptcy is a viable options for you.
If you find that you cannot file bankruptcy, or simply do not want to file, there are several alternatives available, such as consumer credit
In addition, forcing the sale of debtors' homes would be extremely bad public relations, as many people would be much less likely to use credit cards if they thought their use may result in them to losing their homes.
Unless your financial situation is somewhat extraordinary, you probably do not need to worry about losing your home due to credit card debt. Only if you own your home outright, or if you have a very large amount of equity in the house, could the taking of your home become a concern. Even in those cases, it is extremely unusual for credit card companies to seize property due to the time and cost involved.
Credit card foreclosure
Before seizing any property, a credit card company would first need to file a lawsuit against you in your county courts in an attempt to obtain a judgment against you. The court process alone can take many months to complete, and there is no guarantee that the creditor will win a judgment against you, though it probably will win if you owe the debt. Once a creditor obtains a judgment, it can initiate further court proceedings to collect on the judgment.
Although the execution of a judgment could theoretically involve a creditor seizing your home, there are several much easier ways to collect on a judgment which creditors usually prefer. These methods include wage garnishment and levies on bank accounts. Also a creditor with a judgment against you will likely place a lien on your home, meaning that when (or if) you sell or refinance the home, you would be required to pay the judgment out of the proceeds of the sale.
Reasons why a creditor may not try to seize your home
If a creditor with a judgment against you wanted to seize you home, it would first be required to pay off any mortgages or home equity loans you have on the home. Only after paying off the secured creditors could the credit card company sell the home at auction. Since auctions frequently bring less than half of the actual value of the home, creditors are taking a huge risk. Since they must pay the mortgage company up front for the entire amount owed on the mortgage, if the home brings less than expected at mortgage, they can actually lose money on the deal.
In addition, almost all states exempt a certain portion of the equity in a home from creditor execution; this amount ranges from $5,000 in some states to several hundred thousand dollars in others. If a creditor sells your home at auction, they must pay you your exemption amount, regardless of whether or not the creditor made that much money at the sale.
As you can see, this is a complicated and risky proposition for creditors, which is why it is almost unheard of for a consumer to have his or her home seized to repay delinquent credit card debt. Some states, such as Texas, do not allow creditors to seize primary residences to repay judgments regardless of the amount of equity in the home.
If you are being sued by a creditor, or think that a lawsuit may be filed against you in the near future, you should consult with an attorney to discuss your states exemption laws and what action a creditor could take against you under those laws, and what you can do to protect yourself. After speaking with an attorney, some consumers find that they are "judgment proof," meaning they have no assets a creditor could take to repay a judgment against them. This is especially common among elderly and disabled individuals.
The bottom line is that, while possible legally in some states, it is unlikely a creditor will take your home to repay your credit card debts. However, as mentioned before, creditors will take other actions to collect on delinquent accounts, so you should look into ways to resolve your debts if you are struggling to repay them.
Debt resolution options
The first option that comes to many people's minds is bankruptcy -- if you are considering bankruptcy, I encourage you to consult with a qualified bankruptcy attorney in your area to find out if filing bankruptcy is a viable options for you.
If you find that you cannot file bankruptcy, or simply do not want to file, there are several alternatives available, such as consumer credit