If you are in a bind with your finances, and you can't figure out how you are going to pay your credit card bills, you may be wondering what kinds of effects it may produce. Perhaps you are worried about whether or not you will go bankrupt. Or perhaps you are worried about what the card company can do with your home if you cannot pay them the money that you owe.
Because you are living in a home that you are still paying for and is therefore not yours, at least not yet, you know that you are at some risk of foreclosure. You have been given an amount of time to pay for your house, and you have done a considerably good job making your mortgage payments during that period of time so far. Still, are there any strings that attach your inability to pay your credit card bills to your home, and if you are behind on your payments, can the credit card company foreclose on your home?
In most cases, the credit card companies have no control over your home loan. The people that you borrow money from on your cards are a completely separate company than the one you borrowed the money to pay for your house from. Because of this, the company that handles your credit card account cannot issue foreclosure on your home, whether you pay them the money due or not.
This is because of something called an unsecured credit card. This kind of card is one that is not backed up by collateral. Therefore, if you were to fail to make your payments and you file for bankruptcy, you will lose nothing but your good credit and your ability to buy things on credit for a certain period of time after.
On the other hand, there is what is called a secured credit card. This is the type where you agree with the credit card company to give up something of value, or an asset that you have, as collateral. Collateral is something that you are willing to give up to compensate for the amount of money that you would have paid had you been able to make your payments. When applying for a secured credit card, collateral is required to obtain the needed credit.
If there is any risk for your home to face foreclosure because you have not paid your bills, it is because of something like a secured credit card. This is a credit card that is a home equity line of credit, which is backed up by a second mortgage. If this is the case for you, then perhaps, yes, your home may be at risk of facing foreclosure if you fail to make your payments on time.
However, most people go with credit cards that are unsecured, because it puts you at less of a risk of losing your assets. It would be very unwise to put your home up as collateral for your credit cards. The worst you could lose with an unsecured credit card is a good credit report, so why risk losing your home also with a secured credit card?
People who find themselves in a situation where they will have to pay off serious credit card debt often consider as many options as possible that allow them to get rid of their debt without actually having to pay their credit card bills. Try as you might, though, there is no way to eliminate all of your debts that does not involve paying them.
If you want to get rid of debt while maintaining the best credit rating possible, you will have to pay the debts; there is no other choice that will keep your credit score intact.
Ways to Keep from Paying Credit Card Debt while Protecting Your Credit Score from Serious Damage
If you are short on funds and are looking for ways to get around paying all your bills but just cannot seem to make ends meet to pay them all then there is a way you can get away without paying your credit card bills in favor of more important bills. This should only be done if absolutely necessary and for the shortest amount of time possible.
First, pay for the absolute essentials. This means food, transportation, child support, rent, and anything else that you have choice but to pay on a monthly basis. When it comes down to paying your rent or mortgage payment or your credit card bill, choose the one that you have to pay in order to live.
Credit card companies will usually wait 30 or more days before issuing collections or submitting your information to the credit reporting agencies as delinquent. While you may end up paying fees or higher interest rates, it can help you keep your home, car and take care of the things you have to have in order to live.
This should only be used as a way to buy time to get your financials in order and you should make a payment, the late and the current payment as soon as possible on your credit card in order to avoid collections action.
This type of reordering will usually only create small notes on your credit if at all. This means that the damage is not as extensive as doing something drastic as a bankruptcy or charge off will cause.
William Blake has sinced written about articles on various topics from Credit Cards, Debt Reductions and Bankruptcy Law. Are you never able to at the end of the month? Learn how to get your debt paid off faster - starting. William Blake's top article generates over 49500 views. to your Favourites.