Living with debt is a reality for many Americans. Some people manage to keep up with certain debts, such as their mortgage or car payments. But credit card debt is often trickier to manage. Credit card interest rates can be exorbitant, making it difficult to pay off the balance. As a result, many people are faced with the possibility of losing their assets, including their homes.
If you’re struggling with credit card debt, you might be wondering whether or not credit card companies can take your house for credit card debt and want to know more about the steps you can take to protect yourself.
What Credit Card Companies Cannot Do
First and foremost, it is important to understand that credit card companies cannot simply take your house if you fall behind on payments. Not even your mortgage lender could do that without involving the court system.
To take your home, there must be a legal judgment against you. Lenders must obtain a judgment before any action can be taken. This means that the credit card company must file a lawsuit against you and win in court before they can take any property.
Furthermore, in some states, homestead exemptions protect your home from creditors. This means the court won’t even grant them a judgment that affects your home unless they’re your mortgage lender.
What Can Credit Card Lenders Do?
If a legal judgment is made against you, it is possible that the credit card company may attempt to garnish your wages, put a lien on your property, or seize your bank accounts. They can’t directly take your home, but the actions they take could affect your home and other assets.
In this case, it is important to consult with an attorney to understand your options and what steps you can take to protect your assets.
What Can You Do for Protection?
One way to protect your home from creditors is to avoid putting assets in joint names. If a credit card is in your name only, then the creditor can only go after your assets. Additionally, it may be helpful to consider filing for bankruptcy. While bankruptcy is often seen as a last resort, it can allow you to discharge your credit card debt and protect your assets from creditors.
Another option is to negotiate with your creditors. In some cases, credit card companies may be willing to settle for a lower amount than you owe. This can be an effective way to avoid legal action and protect your assets. It is important to remember that negotiating with creditors can be a difficult and time-consuming process, and it is often best to seek the assistance of a professional.
Lastly, consider seeking the assistance of a credit counseling agency. These agencies can provide you with advice on how to manage your debt and develop a plan to pay it off. They can also negotiate with your creditors on your behalf and help you avoid legal action. This isn’t the best option in all situations, but it’s something you can consider among your options.
Managing debt can be a difficult and stressful process, especially when faced with the possibility of losing your home. However, it is important to remember that credit card companies cannot simply take your assets without a legal judgment. By understanding your options and seeking the assistance of professionals, you can protect your home and develop a plan to manage your debt. Remember, it is never too late to seek help and take control of your financial situation.
If you’re looking into a Chapter 7 bankruptcy, you could take the calculator below to estimate if you qualify as a first step to evaluating your options.