I was in a virtual meeting with my friend in Los Angeles and one of the things we talked about was her credit card debt. It’s one of the reasons she couldn’t sleep well. She said that she has accumulated significant credit card debt. She’s trying her best to make payments but it’s a real struggle for her. Now, she’s worried her credit card companies will use a collection agency, which may threaten to put a lien on her house. Is it possible? Can credit card debt take your house?
It’s indeed stressful if you think about it. If you’re in the same situation as my friend, find out here if your credit card companies have the power to take your house. It doesn’t matter if the credit card issuer promotes personal loans and secured debt.
Can Credit Card Debt Take Your House?
Creditors can, unfortunately, put a judgment lien against your home. But they can do so if they get a judgment from the court.
If you don’t repay, your credit score will be affected. The debt collector could take some of the proceeds on your home from a sale just to get the money you borrowed from your unsecured creditor.
It’s shocking and worrying. Sooner or later you might find yourself applying for a homestead exemption.
But it is a good wake-up call for you to ensure that you start taking charge of your debt and paying more than the minimum payment requirement.
Then again, creditors can just go after your house if you leave your credits unpaid. They must first file a lawsuit and win it.
After months of failed collection attempts, your creditors can find a collection action in court.
When your creditor files a lawsuit, you have 30 days to file an answer. It can take a few months before your case is heard.
As long as you don’t ignore your credit card debt in the early stages, then there’s no reason for your properties to be attached. You have time to prepare and prevent your house from being taken away.
How to Pay Off Your Credit Card Debt?
There’s really no easy answer for it. But the first step must be to understand your finances. In that way, you will know how much you can afford to pay every month.
After getting a good grasp of your finances, you can work out your budget.
Create a Budget
When you have a budget, make sure to follow it religiously. It will be useless to have a budget and not follow it.
To create a budget, the initial step is to add your income. It just includes everything, from wages to pensions to benefits.
After knowing how much you can receive every month, list down the things you spend every month. Start with the most important bills, like mortgage, rent, gas, electricity, and water.
Then, write down your spending on food, clothing, and toiletries. You can use your shopping receipts to work out what you spend on those items each month.
Don’t forget to include things that you pay once a year or less often. These would be your car repairs and Christmas gifts.
Then, it’s time to deduct the amount you spend every month from your monthly income.
Your credit card debt may be increasing because you have a budget deficit. It means that you spend more money than you have and carry a balance on your CC.
If you have a budget deficit, make sure to work on it. Reduce your spending to avoid paying high-interest rates. Cut off monthly subscriptions that you don’t really need.
Stop Using Your Credit Card
It is harder to pay off your unsecured debt if you keep on borrowing from credit card companies. Even if it is just for a short amount of time, you must stop using it and have another source of income.
Not using your credit card for your spending can be difficult to follow.
This is especially true if you have been reliant on CC. However, if you have burgeoning credit card debt, then you need to tighten your belt. That is if you don’t want your creditors to take your house after it gets a court order.
One way to stop using your credit card is to have a budget. I assumed you already had done it.
But a budget is just a budget. It is useless if you don’t follow it.
That’s why it is vital that you track your spending. In this way, you can monitor how much you are spending and how much you still have.
You don’t have to turn in your credit cards to fill those gaps. Instead, you can carve a new habit and pay attention to your everyday spending.
For instance, you should have a $40 weekly budget. It means that have to cut back on your Starbucks spending. Instead, you need to pack your lunches during your work week. Here are meal ideas you might want to try.
Tracking your spending will help you easily see red flags and act immediately to avoid racking up debt.
By creating a budget, you are earmarking your money for the things that you need.
You are also choosing how you want to spend your money so that you can avoid accumulating debt while you reach your financial goals. Or use your life insurance as collateral.
Hide Your Credit Cards
This can be a rigid action. But it will help.
Keep in mind that it is easy to create a budget and track your spending. The most difficult one is adhering to your plan.
By hiding your credit card and reading advertising disclosure, you are removing the option to swipe your troubles.
Thus, when you remove the temptation, you are creating the best-case scenario for your financial goals. When your credit cards are out of sight, they are out of your mind.
When you can’t easily reach them, you won’t be tempted to use them and worry about monthly payments.
Be on Top of Priority Bills
These would include fines that you have accrued and taxes. Keep in mind that when you fall behind with them, don’t be surprised to get a visit from enforcement agents.
Get Help
If you can’t curb your spending or you’re not sure what to do with your credit card debt, you can get free debt help. Talk to a financial expert-approved or otherwise endorsed by your mentor. You may also set up a repayment plan, reviewed, approved, or otherwise checked by your creditor.
Debt consolidation is also useful. But remember that you still need to pay the money that you owe.
Credit Card Debt Consequences
There’s no doubt that credit cards are useful in some cases. But if you don’t know how to curb your spending, you can easily rack up debt.
Can credit card debt take your house? Yes. But it’s not that easy. It also takes months to do it. For further help with your credit card debt, make sure to check out this post.
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