As a bankruptcy lawyer, I have had many people tell me that they didn’t need to worry about their unsecured debts (credit cards, medical bills, signature loans and other debt without collateral) because “a credit card can’t take my house or car since I didn’t sign anything”.
So…can a credit card or other unsecured creditor put a lien on a house or car or other property when you didn’t sign anything giving them right to the property?
The short answer to this question is “YES”.
Just because you didn’t sign anything giving a creditor a lien against your home, car or other property doesn’t mean that they can’t get to it.
If you don’t pay your debt, then the creditor can file a lawsuit and get a “judicial lien” which will allow them to have your property sold according to state law.
A lien can mean that the creditor might be able to foreclose/sell your property to satisfy the unpaid debt…. even your home or your car, depending on your state’s exemption laws.
But each situation is different. Where you live affects whether or not YOUR debts can lead to a lien on YOUR house is determined by a number of factors, including what state you live in, how the property is titled, what it is worth, and how old the debt might be. Each state’s exemption laws are different, but in general a creditor has the right to sue and try to be paid from property owned by the debtor.
People often are confused and surprised when a credit card threatens their home or car.
After all, this was a creditor with a debt that they did not agree to give any collateral to, now ending up with a lien on property which can lead to a home bend sold for a ‘minor’ medical bill, loan or credit card debt.
To know whether or not property you own is at risk, talk to an attorney in your area who will explain who can sue you and what they can, or can not get from you if you are sued.
If your property is at risk, bankruptcy, either Chapter 7 or Chapter 13, may be able to help protect you from the debt. Bankruptcy can remove judgment liens from property in many circumstances, or allow time to pay it and protect the property if the lien can’t be avoided.
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Last modified: June 15, 2012