After much legal wrangling, it's possible in some cases for credit card companies to win a judgment against you that can affect your home. In those cases, a lien is placed against your home, which you'll have to pay before you can sell your house. However, such cases are very costly for creditors and thus relatively rare for consumers.
Location
State and local law determines the lengths credit card companies can go to while attempting to collect against a debt you owe. Therefore, it may affect you differently depending on where you live. Credit cards are largely considered unsecured debt -- that is, they're not backed by property, such as secured debts like your house or car. In the U.S. and Canada, it's highly unlikely that a credit card company can secure a debt against your home. In the U.K., a credit card company can get a charging order against your home in some cases. Check your local laws for more information specific to your area.
Extreme Circumstances
Where it is allowed by law, credit card companies can file a lawsuit against you to reclaim all or part of the money you owe. If the court decides that you must repay, creditors may be able to garnish your wages or levy your bank accounts to get the money you owe. In the U.S., unless you own your home outright, in most states it's more trouble than it's worth for creditors to try to seize your home. To sell it and recoup the money they've spent on legal expenses pursuing your case, they'd first have to pay off any existing debt held against the house, including your mortgage, home equity loans and tax liens. So, while it's not impossible, it's also not likely to happen.
What Usually Happens
Instead of kicking you out of your home, credit card companies usually send delinquent accounts to collection agencies to recover as much of the money as they can. In some cases, if you owe a debt and the collection agency can prove it, you can strike a settlement deal with them and pay only part of the debt. In all cases, credit card companies have a statute of limitations by which they must file legal proceedings if they want to sue you. These statutes vary and are determined by local law. If creditors do not settle your accounts and do not sue you prior to a statute's expiration, it will still count against you on your credit report -- but they can no longer sue you.
Considerations
If you live in the U.S., you're protected by the Federal Trade Commission's Fair Debt Collection Practices Act. The Act governs how creditors, including credit card companies and their collection agencies, must act when attempting to collect your debt. By law, they're not allowed to harass you -- including threatening to take your home away. If a creditor threatens you in this manner, the FTC advises you to file a complaint against that creditor with both your state attorney general and the FTC itself. No matter where you live, check your local and federal laws to see what consumer protections are available.
0 comments:
Post a Comment