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Losing Your House Over Credit Card Debt

Nov 20, 2007
If you are in a bind with your finances, and you can't figure out how you are going to pay your credit card bills, you may be wondering what kinds of effects it may produce. Perhaps you are worried about whether or not you will go bankrupt. Or perhaps you are worried about what the card company can do with your home if you cannot pay them the money that you owe.

Because you are living in a home that you are still paying for and is therefore not yours, at least not yet, you know that you are at some risk of foreclosure. You have been given an amount of time to pay for your house, and you have done a considerably good job making your mortgage payments during that period of time so far. Still, are there any strings that attach your inability to pay your credit card bills to your home, and if you are behind on your payments, can the credit card company foreclose on your home?

In most cases, the credit card companies have no control over your home loan. The people that you borrow money from on your cards are a completely separate company than the one you borrowed the money to pay for your house from. Because of this, the company that handles your credit card account cannot issue foreclosure on your home, whether you pay them the money due or not.

This is because of something called an unsecured credit card. This kind of card is one that is not backed up by collateral. Therefore, if you were to fail to make your payments and you file for bankruptcy, you will lose nothing but your good credit and your ability to buy things on credit for a certain period of time after.

On the other hand, there is what is called a secured credit card. This is the type where you agree with the credit card company to give up something of value, or an asset that you have, as collateral. Collateral is something that you are willing to give up to compensate for the amount of money that you would have paid had you been able to make your payments. When applying for a secured credit card, collateral is required to obtain the needed credit.

If there is any risk for your home to face foreclosure because you have not paid your bills, it is because of something like a secured credit card. This is a credit card that is a home equity line of credit, which is backed up by a second mortgage. If this is the case for you, then perhaps, yes, your home may be at risk of facing foreclosure if you fail to make your payments on time.

However, most people go with credit cards that are unsecured, because it puts you at less of a risk of losing your assets. It would be very unwise to put your home up as collateral for your credit cards. The worst you could lose with an unsecured credit card is a good credit report, so why risk losing your home also with a secured credit card?
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Court provides information about bad credit student loans and helps people refine their internet marketing strategies.
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