What Happens When I Don’t Pay My Credit Cards?

I have two home mortgages & one car loan. I’ve been having trouble with making ends meet but I haven’t been late on any payments with my mortgage or auto loan. I’m drowning in credit card debt.

I was wondering what would happen if I stopped paying my credit card bills but continued to pay the mortgages & auto loan? could they go into my bank account & take my money? or take my homes away? thank you for your help!!

Katherine

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Hi Katherine,

I have heard anecdotal reports of credit card companies withdrawing funds without authorization, although I doubt that would be legal.  You’d have to check your cardholder agreement to verify whether or not that is a possibility.

The normal process would be that after the card is charged off, the credit card company could bring a lawsuit and be awarded a judgment.  Then, if state law permits, they could levy a bank account to seize nonexempt funds or garnish wages.  The judgment may also become a lien on the real estate.  If the property is your primary residence then the judgment creditor is generally prohibited by state law from executing the lien and foreclosing.  Your homestead rights vary by state.  In Florida, for example, the homeowner can file a notice of homestead and the lien is removed.

It sounds like you are in over your head.  I would recommend talking to a bankruptcy attorney about a Chapter 13.  Did you know that it may be possible to remove the second mortgage through a cram down in a Chapter 13?

Read: Green Dot

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.