Can credit card debt take away your home?

David - welcome to the site, and thanks for posting your question!

I am not an expert in the credit card debt area, but others on this site are very well-versed in it, and I know some of them will be along soon to respond to your question.

Just from what I know about debt, though, you would have to be seriously past due on the debts before they would attempt to take any legal action against you. And I believe the first thing they would try to do is take you to court to obtain a judgement, then obtain a garnishment against your wages.

If I'm wrong, someone please correct me. :-)

They can sue you for the debt, obtain a judgement, and among other ways of collecting, put a lien on your property.

Have you explored all of your options? Settlement is usually the last resort, with the exception of filing for bankruptcy, plus you'd owe the IRS a lot of money on the forgiven portions of your debt. Assuming you were able to settle the total for 50%, you'd then owe the IRS for income of 23,000.

It is also possible for you to be sued while you are attempting to settle. Additionally, your credit report will take a pretty big hit--seven accounts that will likely go 90+ days without payment...

Thanks, Morningstar! I knew one of you would pop up with some great info! :-)

Suebee, I think you're right, as I believe that wage garnishment is the most economical method of collecting. Not only that, but with real estate, there can be the issue of multiple encumberances and the respective seniority. Still, it is possible, although it may depend on the state you live in (homestead exemption is the term, I think).

They cannot take your home.They can put a lien on it,but as long as you have a first mortgage good luck on them ever seeing a penny. The lien would have to be satisfied before sale or refinance.

Thanks for the response. I live in California. The consultant told me that as long as you didn't use collateral on your house, they cannot touch your house. I asking to make sure before i go into settlement.

Morningstar, why would i owe the IRS if i go into settlement? I am only owing credit card companies money. This is getting complicated. I'm glad i'm asking all this questions before i do go into debtsettlement.

And btw, i do not owe mortgage to the house. It has been paid off.

Thanks,
David

Guest, You technically dont owe IRS if you do a settlement. What Morningstar is talking about the amount that is left over say you owe 2000 on a card you settle for 1200. Then 800 has to be reported to IRS as income. It is added to your income for taxes. Hope this helps explain a liitle more. KYSIDE38

Thanks kyside, that explains the situation. As for as the creditors being able to put a lien on my property, can they do that? I'm trying to negotiate with my creditors in lowering my apr so i can make minimal payment for now. I am hoping to get back on my feet in a year a pay them back.

I am quite upset with my creditor, they saw a trend that i was just making minimum payment and they jacked my apr from 12% to 27%.

They can only put a lien on your propery if they take you to court and get a judgement.

Guest, I would consider some type of consolidation. You need to check out any company with a fine tooth comb. Many are great and really help people and many are scams. Legimate company can help. They negotiate with the creditors to get the interest rate down. KYSIDE38

Guest - everything posted here is correct - I've personally had the situation myself where you settle a debt for less than the amount owed, and then have to report the balance to the IRS as income, which means you have to pay taxes on the "forgiven" amount.

A lien can be placed on your house, but only after the creditor attempts to obtain a judgement against you. And you would receive notification of this before it happens.

What Morningstar is talking about the amount that is left over say you owe 2000 on a card you settle for 1200. Then 800 has to be reported to IRS as income. It is added to your income for taxes. WHAT!!! if she saves money from check to check and settles for $1200, the $800 is not additional income. Now that $2000 could be taxed if it were lottery winnings or borrowered and reported to the IRS.

Rm,
Please go to this site: www.irs.gov. The 1099 the creditor will issue you is for forgiven debt which they are required to report if the dollar amount is over $600.00. The Irs will consider this as taxable income.