Can Credit Card Debt Collection Lead to My Home Being at Risk
I owe 42,000 total, to different companies for credit card debt.
How common or often is a person forced to sell their house for the equity to satisfy judgements against them for unsecured credit card debt?
Having your home forced to be sold to satisfy a judgment that resulted from credit card debt is just not that common a practice.
Credit card collection efforts are done in a one off capacity.
If a creditor or debt buyer sues, they are typically suing for one debt individually. That one debt is normally not of an amount large enough to justify the costs of trying to force the sale of an asset like a home in order to collect.
Creditors and debt buyers sitting on a judgment know that what they have is a piece of paper that they need to turn into money. They will try the other forms of turning their paper into money like:
- Wage garnishment
- Bank account levy
- Property lien (this is the one that speaks to your concern)
A creditor looking to enforce payment on a judgment also knows that the debtor can seek the protection of the bankruptcy court at any time. Any one of the three bullets above can send a person to the bankruptcy court.
Property liens resulting from a credit card judgment are common enough. Forcing sale of the property to get paid on a credit card debt is not. More typically the lien on the property gets paid, to whatever amount, when the home is sold or refinanced.
Filing bankruptcy to eliminate credit card debt.
People want to avoid bankruptcy. Creditors and debt collectors know that. But spooking someone into it by hitting up the roof over the head is a sure fire way to send someone right to a bankruptcy attorney.
If you qualify for chapter 7 it most often wipes out any unsecured creditor claims.
If you have too much equity in your home to file a chapter 7 in your state and want to keep the home, you can file a chapter thirteen where the unsecured creditor is likely going to get paid far less than 100% of what they are owed – In some instances as little as 10%.
If you have income, assets, and property to protect than I would encourage you to put together a plan to settle with creditors in order to avoid any of the bullet items above.
Break down your credit card debt for me in a comment reply below. List them out by the name of the creditor and the amount owed (round to the nearest hundred dollars). I can provide some additional feedback and risk exposure that you are concerned about.
Any reader with similar concerns can post questions and get feedback below.