If you've run into trouble paying your credit cards on time, you could end up with a judgment against you in civil court. Once that judgment occurs, your credit card company could get an order that places a lien against your property. Whether the creditor can place a property lien primarily depends upon which state you live in.
Civil Court
When you don't pay your credit card bill, your credit card company or a third-party collection agency could sue you in civil court. If it wins the case, you'll be ordered by the court to complete a financial disclosure. The financial disclosure requires you to divulge all of your financial assets including any property you own. If you don't fill out the documents you could be held in contempt of court.
Judgment Lien
After you have lost a civil court case, the judgment creditor -- your former credit card company or collections agency -- will try to get you to pay the judgment amount voluntarily. This could mean coming up with a payment plan or negotiating a lump settlement. If you refuse to pay, the credit card company will usually get an Abstract of Judgment from the court, which is filed with the county recorder in the county where you own property. This creates a property lien.
Property Liens
When a creditor has a judgment lien placed on your property, it means it has a financial interest in your property. Most of the time, the lien will remain on your property until you pay the debt off or until you sell your home. If you sell your home, your creditor will be paid from the proceeds of the sale. In some cases, you may be forced to sell your home to pay the lien.
State Exemptions
State property exemptions can protect you from judgment liens on your property. Whether a creditor can place a lien on your property and whether you can be forced to sell your home depends upon where you live; property exemptions vary from state to state. For example, in Florida, you have an unlimited homestead protection, meaning that a judgment creditor generally can't place a lien against your primary home. However, if you live in Rhode Island, you have no property exemptions, meaning that a creditor can place a lien against your home for any amount.
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