Credit card debt is usually unsecured debt; there is no collateral that can be seized by a credit card company in lieu of payment. However, if a credit card company wins a lawsuit against a debtor, they may place a lien on his home.
Winning a Judgment
Credit card companies cannot seize any assets without first winning a court judgment. State and federal law restricts the way in which a judgment creditor can seize assets, but creditors are typically restricted to garnishing a debtor's bank account, wages and placing a lien on a debtor's home.
Lien
While a credit card company cannot seize a house, it can place a lien on it. A lien is filed with the local land records office. If the home is sold or refinanced, any proceeds from the sale will be given to creditors who hold liens on the property to satisfy the debt.
Bankruptcy
When a debtor who files for Chapter 7 bankruptcy has significant equity in a home, the bankruptcy trustee may sell the home and distribute the proceeds to creditors, including credit card companies. Each state has its own "homestead exemption" that exempts a certain amount of home equity from distribution to creditors.
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