Can a Credit Card Company Take My House?

Reader Question: Can a credit card company take your house if you live in North Carolina?

A credit card company cannot swoop in and take your house away from you. It's possible, in theory, that they could try to put a lien on the house through a court of law -- but even this is unlikely. Here's why.

If you stop making payments to your credit card company, the first thing they will do is send a notice of overdue payment (and you can probably expect a penalty fee to be assigned at this time too). Eventually, the credit card company will turn your account over to a collection agency. The agency will call you to no end, trying to elicit the money you owe.

It's possible, but extremely rare, for the card company to sue you in a court of law. If they did sue you and won their case, it's possible they could try to put a lien on your house. This would have to be court-ordered by judge. But for people who still owe money on their house (which is most of us), the mortgage lender is the primary lien holder. So if a court-ordered foreclosure took place, the mortgage company would absorb most of those proceeds -- if not all of them. This would leave the credit card company with a big legal bill and nothing to show for it.

Most financial advisers tell people with money problems to protect their home at all costs, since it's generally the biggest and best asset a person has. Sometimes this means defaulting on other things, such as credit card bills ... and then taking care of those issues when you're in a position to do so.

I'm not advocating that you blow off your credit card company. While it's unlikely they could ever take your house -- or that they would even try -- they can certainly make your life worse. They can send your account to collections, which will show up as a negative entry on your credit report. This will drag your credit score down and make it harder to get financing in the future.