Can a Credit Card Company Take Your House?

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Key takeaways

Creditors can take your house only after suing you and winning a court judgment against you.
Very rarely do lenders take your house for credit card debt.
You can protect your property by staying on top of payments, negotiating with creditors, or filing bankruptcy.

When you’re overwhelmed with debt, you may wonder if credit card companies can come after your house. The short answer is yes. If you have delinquent accounts, your creditor can take steps to take your home. Instances of credit card defaults have been increasing. Financial institutions wrote off $46 billion in 2024, and delinquency rates are climbing to 3%. It is a legitimate worry.

Before you panic about losing your home, know that it is an extremely rare result. Creditors may hire debt collectors and use aggressive tactics, but chances are it’s not worth them putting a lien on your property.

We’ll review how the legal process works and ways to protect your assets before things escalate.

What is a lien on a house?

A lien on a house is a legal claim placed on the property by a creditor or lender due to unpaid debts. It gives the lender the right to the property or its value. You still own the property, but they can take ownership to satisfy the debt. If you want to sell, they have the right to collect the proceeds.

Liens can arise from various debts, including unpaid taxes, contractor work, or overdue mortgage payments.

Can credit card companies put a lien on your house?

A credit card company can put a lien on your house, but it is not easy. They cannot simply take your house, nor can a mortgage lender. We’ll go over how the process works.

Secured debt vs. unsecured debt

There are two types of debt: secured and unsecured. Unsecured debts are not tied to collateral. Examples include credit card debts, medical bills, student loans, and personal loans.

Secured debts, on the other hand, are backed by an asset like your house or vehicle. If you default on your auto loan, the lender could repossess your car. If you fail to pay your mortgage loan, your lender could foreclose on your house.

A creditor can put a lien on your house for unsecured debt, but first, they must take you to court.

Creditor would have to file suit

Creditors cannot place a lien on your home just because you miss payments. There are steps they need to take. First, they will try to collect the debt with phone calls, letters, and so on. If these attempts are unsuccessful, they have the legal right to file a lawsuit against you. The purpose of the lawsuit is to obtain a judgment.

A judgment is a legal decision ordering you to pay a specified amount of money. If you don’t pay, your creditor can pursue a lien against your property now that they have a judgment. This is often called a judgment lien.

Securing a judgment lien is much more common with secured debts. It only happens with unsecured debts as a last resort. One reason for this is that most real estate will have a mortgage. The mortgage holder has the first claim on funds if you are forced to foreclose on your property to pay debts. There’s often not enough money left over to pay other lenders. It’s a long process and is often not worth it.

Debt collectors can sue!

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Wage garnishment and bank levies

When a credit card company sues you, they can ask for wage garnishment or to freeze your bank account. These are more common methods for unsecured creditors to get their money back.

The good news is that credit card companies do not garnish wages often. Many prefer to negotiate settlements or payment plans instead of pursuing wage garnishment. The reason for this is that lawsuits are expensive. Creditors would rather work with you than take you to court.

Homestead exemptions

Homestead exemptions protect a portion of your home’s equity from court judgments. The idea behind them is that you will not be forced to sell your primary residence to satisfy a debt. The exact exemptions vary from state to state.

What do you do when a credit card company sues you?

You must act promptly when a credit card company or debt collector takes you to court. Read the lawsuit, understand the claims, and respond by the deadline. You typically have a limited time—often 20 to 30 days—to respond, so be quick.

Your formal response is called an answer. In it, you can dispute the debt, challenge the amount, or assert defenses like the statute of limitations if the debt is too old.

If you fail to respond to a summons or appear in court, the creditor will likely win by default. Whatever you do, do not ignore the lawsuit.

How do you remove a lien from your house?

The most common way to remove a lien is to pay off the associated debt. Once paid, the creditor should request a release or satisfaction of the lien with the county recorder’s office, officially clearing it from your property records.

You can dispute the lien in court if you believe it was placed in error or is invalid. This often requires legal assistance to prove that the debt was not yours, was already paid, or the lien was filed improperly.

In some cases, you can negotiate a reduced settlement with the creditor. They might agree to accept a lower amount, especially if you’re facing financial hardship. This is very difficult to do since they’ve already won a court case compelling you to pay.

You can potentially wait it out. Liens have expiration dates, but the duration varies by state. Generally, they are effective for 10 years. Many states allow lien extensions if the creditor renews them before they expire. While you can legally wait them out, there are no guarantees it’ll work.

Finally, filing for bankruptcy can eliminate debt and the lien. Bankruptcy is a significant legal proceeding usually best for consumers with multiple debts they cannot afford to pay. Before filing for bankruptcy, it’s a good idea to speak with an attorney and make an informed decision. Many attorneys offer an initial free consultation.

Dealing with debt collectors?

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Does a lien affect your credit score?

A lien indirectly affects your credit score. The damage to your score is caused by circumstances leading to a lien. The missed payments, high debt levels, and your account being put in collections significantly lower your score. By the time a creditor brings a lawsuit against you, your score has already taken a major hit.

The lien itself won’t be listed on your credit report, so it cannot impact your score. That said, it can still cause issues. A lien is a matter of public records, which some lenders review during a mortgage application or large loan request. It signals to lenders that your financial situation is unstable and you are a high-risk borrower. They will be less likely to approve a loan or offer favorable terms.

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Prevent a lien and protect your home

The best way to prevent a credit card lien is to stay current on your payments. Pay your bills on time each month, and you’ll stay out of debt and not have to worry about losing property. At the very least, you need to make the minimum payments each month. Paying more – the entire balance ideally – is better. Set up autopay or put reminders in your calendar so you never miss a due date.

If you’re struggling with credit card payments, contact your creditors early. Most consumers do not realize this, but you can negotiate credit card debt. Many credit card companies will work with you so that they will receive something instead of nothing. Ask about hardship options or payment plans. You may even be able to negotiate a lower payment.

Consider a debt consolidation loan. Consolidation simplifies payments and potentially lowers interest rates. You get out of debt faster and save money.

Another debt relief option is to visit a nonprofit credit counseling agency for free help with finances. Credit counselors can enroll you in a debt management plan (DMP), negotiate lower interest rates, or waive fees. You make one affordable monthly payment to the agency and are out of debt in three to five years.

For more serious debt concerns, consider debt settlement or bankruptcy. In debt settlement, you or a debt settlement company negotiates with creditors to accept a reduced lump-sum payment. The remainder of your debts are forgiven. Tempting as it sounds, it is not usually the best option. There is no guarantee it will work. You can end up further in debt, and it may damage your score.

Bankruptcy can discharge your debts and protect your assets. Seek legal advice before you go this route.

If you’re already facing legal action, consult a debt attorney to understand your rights and protect your home from liens.

Tired of having poor credit?

Check out credit building tips and tricks.

Frequently asked questions

1. Who can put a lien on your house?

Creditors, contractors, tax authorities, or anyone you owe money to can place a lien on your house. They must have a legal claim and obtain a court judgment.

2. Can you sell a house with a lien on it?

You can sell your house, but you must repay the lien first. Consumers often repay the lien using the sale proceeds before completing the transfer.

3. Can I lose my house over credit card debt?

Losing your house is possible, but it is rare. The creditor would have to sue, win a judgment, place a lien, and seek foreclosure.

4. Can a lien be placed on my house for a spouse’s debt?

Possibly, depending on state laws and whether the debt is shared or if you live in a community property state.

5. Will credit card companies negotiate a payoff?

Many credit card issuers are willing to negotiate a lump-sum settlement or lower payments, especially if you’re facing financial hardship. It is best to negotiate a payment before the creditor takes you to court.

6. What happens if a credit card company sues you and you can’t pay?

If a creditor sues you and you can’t pay, they may win a court judgment against you. This can lead to wage garnishment, bank account levies, or a lien on your house. While losing your home is rare, the judgment can still impact your finances and credit. It’s best to explore payment plans, settlements, or legal help to avoid harsh consequences.

Bottom line

While the thought of a creditor coming after your house can be alarming, it’s often a last resort after a lengthy legal process. The best way to protect your home and finances is to stay proactive about managing your credit card debt.

Start by tracking your spending and creating a realistic budget. Make at least the minimum payments every month.

If you’re struggling to keep up, reach out to your creditors. You can set up a payment plan or negotiate a settlement. Early communication is key to keeping your case out of the courts.

Managing debt well not only protects your home from potential liens and you from wage garnishments but also helps you regain control of your finances. You can become debt-free and keep your property.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

Can a Credit Card Company Come After My House Due to Debt?

Key takeaways

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What is a lien on a house?