Technically, it is possible for a credit card company to foreclose on your home because you stopped paying on a credit card. However, such foreclosures almost never happen, according to Bills.com. State laws make the process difficult, resulting in too much hassle for the card companies. Bills.com notes that homes can be voluntarily handed over during a bankruptcy liquidation, but that's usually because the homeowner is looking to get rid of all debts, including the mortgage.
The Foreclosure Process
A credit card company trying to foreclose on your home is forced to follow a different process than your mortgage company. Mortgage companies often foreclose on homes and sell them at auction to pay the balance remaining on the mortgage. The process begins after you miss your first payment but usually isn't started until you fall two or three months behind. Foreclosure by a credit card company works differently and takes much longer to complete.
Timeline
MSN Money reports that generally, your credit card account will remain open until you have fallen six payments behind. At that point it is closed and the card company lists it as charged off. The next step is placement with an internal or external debt collection agency. Debt collection efforts often continue for months or even years. Eventually the credit card company or debt collector could file a lawsuit against you and win a judgment in court. Judgments are court orders signed by a judge. A judgment in a credit card lawsuit orders you to pay the full amount owed on the account.
Taking Your Home
A credit card company with a judgment against you can return to court for permission to foreclose on your home to satisfy the credit card debt if the laws in your state allow it. Credit card companies usually pass on the option because foreclosing on your home requires the card company to pay off the first mortgage as well as any additional mortgages, such as a home equity loan. After paying all the mortgages, the card company has to hope the house sells at auction for enough money to cover the paid-off mortgages and the credit card balance.
Garnishment
Card companies are far more likely to pursue garnishment of your bank account or wages than take your home. Bank garnishment allows the card company to freely withdraw money from your checking or savings account, while wage garnishment allows a percentage of your paycheck to be sent to the card company each payday. That's a much better arrangement for the card company than a long and risky attempt to foreclose on your home.
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