Q: Could I lose my home due to credit card debt? Is it a good idea to go through a debt settlement company?
I owe about $12000 in credit card debt. I've Been Making My Payments On time but with the high interest it's making it harder to keep up. I was considering using a debt settlement company such as national debt relief our freedom debt relief company but was concerned that during the process while the settlement company is negotiating I could be sued by the creditors and was wondering could the creditors do anything to my home? Like Put A Lien On My Home or try to foreclose my home while working with the debt settlement company? Is it a good idea to use a debt settlement company or try to handle it by myself and try to swing it?
A:
I've never heard of anyone who was happy with the outcome when using so-called "debt settlement" companies, but I have heard several horror stories.
If you are the sole owner of your home, then any creditor who sues you and procures a judgment against you can file that judgment as a lien, and through post-judgment execution, for a sale of your home. If you have a mortgage on your home, a subsequent judgment creditor can only attach to any equity in the home after subtracting the balance of the first mortgage. Practically speaking, a foreclosure sale of a property is a "distressed sale", and often brings less than half the fair market value of the property. If you own your own jointly with another person, a judgment lien can only attach to the portion you own. If you are married and own your own as tenants by the entirety, only a judgment creditor with a judgment against both of you, jointly, can reach your residential property.
Before paying any money to, and hiring, any so-called debt consolidation or debt settlement organizations, you would be wise to speak to a lawyer about your options. You can also speak to your credit union or banker about taking out a second mortgage to pay off your credit card debt at some negotiated discount amount. A home equity loan will involve a lower interest rate than you are probably paying to your credit card issuer. Credit unions' primary business is second, or home equity, mortgage loans.
There are other possible legal alternatives for resolving your debts.
1 user found this answer helpful
A: I agree with Mr. Winterstein. Look for an attorney who handles bankruptcies. Also it depends on the nature of your debts. If the credit card company assigned the debt but doesn't have the paper work right you may have an option.
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