If you owe unsecured debt, then it is just that. It is debt that is unsecured. That means that your unsecured creditor, such as your credit card company, cannot come and immediately take your possessions, such as your house or vehicles when you fail to pay.
But if you fall behind on your bills, that unsecured creditor can try to transition into the role of secured creditor who can take your possessions. This can be done by getting a judgment through a civil suit and then attaching your non-exempt property in satisfaction of past due debts. This might involve filing a lien on your real estate.
How Does the Process Work?
If you fall behind on your credit card bills, debt collection companies will start calling you and trying to collect the debt. If that doesn’t work, a lawsuit might be filed against you to collect the debt. As an original creditor, a credit card company or bank doesn’t have the primary purpose of debt collecting, so they are not regulated under the same federal laws as a debt collector, whose primary purpose is to collect debts. If you don’t make payments, then the debt collector will file a lawsuit against you. There are exemption laws in each state, so those laws play a major role in the liens and judgments.
As an example, if you live in Texas and specific criteria are met, the homestead exemption will allow you to exempt your home’s entire value from creditors. Another state might allow you to protect as much as $5,000 value in a car. If your car’s equity is higher, the creditor with the judgment might be able to sell it to collect from the non-exempt equity. If you owe more on your house than its worth, a lien would not benefit the creditor in any form or fashion as they could not collect anything from the debt by using that approach.
Can Filing For Bankruptcy Help?
If you are being sued by a debt collector or original credit, filing bankruptcy can stop the lawsuit. However, you will need to seek the guidance of an experienced bankruptcy attorney in your state. These are matters that should be taken seriously, so you need the guidance of someone who is experienced in handling such matters and who knows and understands the FDCPA and the laws and regulations that go with the act. Cases vary from one client to another, so you should seek legal guidance on your own.
Consult With an FDCPA Attorney
If you are concerned about delinquent debts and you are being contacted by third-party debt collectors, you should consult with a FDCPA attorney. If you are wondering if a debt collector will take your house or file a lien, an attorney can help you and come up with the best solution for your situation. Complete our Free Case Evaluation Form on this page to get your claim on the right track. You will be given a free case review by a FDCPA attorney who serves your area.