Can Your Household Items Be Seized for Credit Card Debt?

No credit-card company or collection agency can take your property unless it files and wins a lawsuit against you. While it is possible that a creditor could seize some of your household items to satisfy your debt, it is more likely to go after liquid assets such as your wages and your bank and investment accounts.

Unsecured Debt

Unsecured debt is not "backed" by your personal property as collateral. Credit-card companies don't automatically have the right to seize your assets if you get behind on your payments, but must successfully sue you first. Once they win a court judgment, they can take aggressive action to persuade you to pay the debt.

Judgment Collections

Each state sets its own laws on what a judgment creditor can take from you in order to satisfy a debt. In most states, a judgement creditor can garnish your wages or seize your bank and investment accounts. The law may also allow a judgment creditor to seize some of your personal property so that it can sell the items and recoup what you owe, though there are usually significant limits on the types of items that they can seize. As a practical matter, most creditors won't seize household goods unless you own things of very high value. Selling smaller items off at a sheriff's auction just isn't a cost-effective way of collecting a debt.

Personal Property Exemptions

The types of personal property and household items exempt from seizure differ from state to state:In New York, creditors can't seize furniture, clothing or kitchen appliances and must leave behind one television. In some states, a creditor can technically seize such items, but only if their value exceeds a state-mandated exemption. For most creditors, trying to assess the value of household goods before seizing them isn't worth the trouble.

Stopping a Lawsuit

While a creditor usually can't seize your toaster, its still a good idea to avoid getting sued by a creditor. A court judgment can really hurt your credit and, as long as it remains unpaid, credit bureaus can report it until the statute of limitations on judgment collections runs out, which in some states can be 20 years or more. Never ignore communications from debt collectors or creditors: Many will work with you to set up a payment plan that can keep you from having to go to court. If you are in serious financial trouble, contact a credit counselor or bankruptcy attorney to learn about legal options for managing your debt. If you act quickly, you can stop a credit-card company or collector from filing a judgment and the resulting damage to your credit report.