When your debt starts to mount up it can be a very tough situation to start to deal with, often people will be filled with all types of anxiety when it comes to finally paying off that debt, you could be worrying about what might happen if you truly cannot afford to pay it off.
It can be a very sticky situation leaving you to worry about your own and your families wellbeing. If you find yourself in a similar predicament to this, you could keep yourself up to date on what your rights are and about what you’re able to do to ease some of the anxieties that a situation like this can bring you.
It’s important to know what type of debt that you’re initially dealing with.
There is a secured debt and unsecured debt. Unsecured debt requires zero to little security as the lender must take you to court to receive the money that is owed to them.
The lender decides whether you qualify for this type of loan based upon the person who is borrowing the money credibility to pay it back. They will be looking into your credit score.
Banks will tend to have a higher interest rate on these loans. The conditions for these loans are often much stricter and are only made available to you if you meet those requirements. A secured debt is when the person that is borrowing the money places an asset to achieve the loan.
This means that in a case of you not being able to pay the loan back the asset will be used to make up the difference.
A mortgage for example is a secured loan, if you can’t make the payments the house will then be used to make up the difference.
Credit Card Debt
A credit card company cannot directly take your home for falling behind on payments and not being able to catch up on what you have missed out on paying.
A credit card is a form of unsecured debt, which like stated earlier they can’t take your assets, as you never agreed to that asset being put up for collateral. In almost all cases your house should be fine when dealing with credit card debt.
As the debt is not secured against your home but what they can do is get in touch with you to make sure that you can and will start making your payments again. If that is the case and you then proceed to not paying up what you owe, the creditor can take you to court to start the process of what is owed.
Once that process has started it’s imperative that you stick to your payment plan as agreed to with the courts as if you fail then you can then expect a visit from a bailiff. Bailiffs can be sent your home address if you break the agreement you made with the court and can start to take the assets that you own as a way of paying off the debt that you owe.
Can They Take Any Court Action?
Since credit cards fall under an unsecured debt it is not legal for your creditor to take your home from you. However, once they’ve filed against you it’s difficult for you to convince the court otherwise as technically you’ve agreed to pay them the money that you owe.
Luckily as court can be an unpleasant experience for everyone involved creditors will choose to avoid it for as long as they can.
Yes they will only take this action against you if they really don’t see any other resolvement of the issue. When you begin to make the repayments to your creditor if you can repay more than the minimum then your best bet is to take that option as it will obviously clear your remaining debt a lot quicker than just slowly repaying at the minimum rate.
It is important to be in contact with the creditor so they can get a better understanding of what your financial situation actually is. You should always keep in mind that if you do not have the money at your disposal there are some options that you can look into but it’s important to do your own research with them as you may find something that handles your specific situation the best.
As well as staying in contact with your creditors it is highly advised to seek financial advice from a professional who can help you understand every route you can take to pay off your debts.
So the answer to the question: can a credit card company take your house, is no. However, like stated earlier it is important that you are aware of what type of debt is mounting. In a secured debt case it is highly likely that the asset you placed up for collateral will be taken by the company.
Credit card companies luckily fall under unsecured debt but you need to be aware and do everything you can to stop a credit card company taking legal action against you.
It’s highly important that you make absolutely sure that your creditors know that you are looking at every possible plan that you can to get back on the right side of your finances.
If you find yourself stuck and feel like you need help it is also highly important to speak to a financial advisor, although they can’t fix your problem, what they can do is assure you that you do in fact have options that can help you get to the point you need to be.
Keeping your debt away from the court is what you need to focus on, you can do that by contacting your creditor and simply explaining exactly what is going on with you and why you’re struggling to make payments. Hopefully this has helped with your general anxieties when tackling a very difficult situation such as debt.