Debt And Assets Question

I have a lot of credit card debt and am starting to fall behind on the payments. Am I putting my assets at risk by not making every monthly payment to my creditors? Thanks for the help.

Potentially yes, but it sounds like you are pretty far away from that stage if you are just starting to fall behind. How far past due are you at this time?

So you know, the original creditor typically tries to collect on the debt for up to 6 months (on average, assuming you continue to miss your payments) before sending the debt to a collection agency, debt buyer or attorney's office for collection.

If the account ever ended up with an attorney who is licensed in your state, then a lawsuit could potentially be filed against you. If the debt is not resolved after that point, then a judgment could be obtained against you. If you still are not able to make arrangements with the law firm at that time, they could move to try and execute the judgment through a wage garnishment, property lien or bank account levy. They must have a court order to do this.

 

if i am making payments to a collection agency, could they still send the account to an attorney's office in my state to try and sue me?

Mac-

It is highly unlikely that the collection agency would forward your account to an attorney if you are making payments towards the debt. Only if you start falling behind with them would they consider taking such action.

However, one question- do you get the collection agency to lower the interest rate for the payment plan? You may be paying off your card at the default interest rate, which can be anywhere between 26-30%.

Good points by everyone.  One thing to keep in mind too:  if your account has "charged off" and is in collections, the collection agency is no longer by law allowed to charge the "default interest rate" on the debt.  Each state has maximum allowable interest rates that collection agencies can charge, although some, particularly debt buyers, will try to ignore this.

While we're on the topic of states, as it pertains to your original post, what assets a credit card company can go after (after a judgment as Jenks mentioned), depends on your state as well.

So I guess the next best question is where do you live?

Thank you everyone for reaching out. Right now I currently reside in Texas.

From what I understand, Texas has a homestead protection act. This protects your primary residence from your credit card lenders. They could potentially file a lien on the home to secure the debt, but I am pretty sure that they cannot force the sale of the home in Texas, so it would not make any sense for them to do that. Unless they want to wait it out until you sell the home (if you ever do), which could take forever anyway so that is also unlikely.

I am also fairly sure that this homestead protection act does not apply to any secondary residences that you may own, so watch out there.

Debt and assets issue- a creditor can obtain a judgment and attempt to execute that judgment by placing a lien on the debtor's home. How likely is this?

To answer your debt and assets question Indy Gal- not very likely, especially if you reach out to your creditor or collector to resolve the debt before they file a lawsuit (I should say before and if). Even after suit has been filed, you will still have a chance to settle the account or set up a payment plan.

However, if the creditor is awarded a judgment, and nothing is done, they would move to execute it through a wage garnishment, property lien or bank account levy.

And, in some states, if you own a home and the creditor is awarded a judgment the lien is automatic, so that is another reason why you want to try and settle the debt or set up a payment plan long before legal action may be taken.

Debt and assets issue (with bankruptcy)

It's all about the estate.