If You Are Sued for Credit Cards, Can They Take Your House?

When your credit card company sues your for failing to pay back the money you charged on the card, you face a range of possible consequences. While each credit card debt situation is different, it is very unlikely that a card company can take your house from you because you haven't paid your bills. Always talk to a lawyer in your area if you are getting sued or need legal advice.

Credit Card Debt

The majority of credit cards allow users to use unsecured forms of debt. An unsecured debt is one in which the creditor does not require you to give any collateral in return for granting you credit. So, when you default on the loan, the credit card company has no legal interest in any of your property. The only thing the company can do is sue you to try to obtain an interest, or try to convince you to pay back the loan.

Secured Credit Cards

Some credit cards do require you to provide a security interest. These secured credit cards are typically offered by banks or credit unions to people with low credit scores. These cards usually require that you pay a specific security deposit or have a minimum amount of money in your bank account. Once you get the card, the credit card company takes a security interest in those funds, and if you default on the loan the company can take those funds to pay off the debt. Secured credit cards typically do not require you to give a security interest in your home.

Lawsuits

Merely getting sued by your credit card company does not entitle them to take your property. The credit card company still has to win its case in court, and you have the right to present a defense and fight against the lawsuit. If the company does end up winning, the court grants a judgment in the company's favor and states how much money you have to pay.

Collections

Once a credit card company wins its lawsuit against you and receives a judgment, the company can then try to collect on the debt. Typically, they do this by using a collection agency to persuade you to pay the debt, garnish your wages, levy your bank accounts or place a lien against your home. When the company places a lien on your home, you cannot sell or transfer the home until the lien is released by the company, usually after you pay the judgment amount. However, this does not mean the company can take your home from you.