In some states, a civil judgment gives creditors, such as credit card companies, the right to place a lien on your home. Thus, leaving credit card bills unpaid could place your property in danger of foreclosure--even if your mortgage payments are up to date.
Facts
Most credit card companies charge off unpaid debts and sell them to debt collectors. A credit card company has the right, however, to keep the debt on its accounting ledger and file a lawsuit against you. If the credit card company wins the lawsuit, the court will grant it a civil judgment against you. Depending on your state laws, this could give the company permission to place a lien against your property.
Features
Credit card companies can use a property lien to foreclose on your home. Once the property is in the creditor's possession, it can sell the home and keep the proceeds from the sale as payment for your delinquent credit card debt.
Considerations
When selling your home, the credit card company must pay off any liens that take priority over its own lien, such as mortgage liens or tax liens. If the liens against your property exceed the property's value, this can deter a credit card company from initiating a foreclosure, since doing so is not in the company's best interests financially.
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