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What happens if you cannot pay off your credit card debt? |
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Most people know credit cards are unsecured debt(s). And some are under the mistaken idea that the companies have no recourse if a card holde defaults. That is, of course not true. They have the legal option to sue to recover their monies. Not being able to pay is unfortunately not considered a defense in a creditor lawsuit. If the creditor wins a judgment they can garnish wages, and levy bank accounts. Place liens on real property (sometimes force the sale of that property). Petition the court to liquidate any non-exempt assets of the debtor. Every state has a set of exemptions to help protect a debtor's property. It is a good idea for everyone to be informed of what those exemptions are (just in case).
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A lot depends on the amount of the debt. If it is only several thousand dollars they will sell your account to a collection agency who will start hounding you at home and work. They will also place a negative report with the credit reporting agencies and all future credit will probably be denied for the next seven years.
If it is a sustantial amount then you will probably get a letter from an attorney and they will take you to court. When they get a judgement it will be collected in accordance with the laws of your state.
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Further..........any real property that YOU OWN, such as land, houses, business property, and inventory, can have a LEIN put on it, so that if and when you sell that property, the amount of the lein has to be paid off, before you get any money from the sale. Leins are registered at the county or state level.
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I have written more than a couple Hardship Letters for my credit card companies that have resulted in lowered interest rates and lowered payments. Check out http://not-out-of-debt-yet.blogspot.com
First answer by Carol King. Last edit by Techtoch60. Contributor trust: 43 [recommend contributor]. Question popularity: 204 [recommend question]
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