- Centurion Member
- Posts: 3935
- Joined: Thu May 08, 2014 7:42 pm
- Location: United States
There is something I don't really understand about judgements on credit card debt, so I'm going to explain them as I understand them and would appreciate it if someone can point out where I'm wrong.
You get an unsecured card and make a purchase with it - say, a computer. You don't pay the card off. Because credit card debt, at least at that stage, is unsecured, the issuer can neither go after a security deposit (because the card wasn't issued with one) nor the computer (because credit card debt is unsecured apart from the security deposit that a secured card has).
The issuer may, after some time, close the account and go to court and sue you for whatever debt remains. If you paid off most of the debt and tried to make a good effort, the probability of a lawsuit is low - the issuer will just report the lack of payment to the credit bureaus and you'll get a lot of bad marks on your credit report (and awful FICOs). A judge may feel a judgement isn't appropriate and dismiss such a case.
On the other hand, if you show very reckless behavior in borrowing or don't make any payments at all when you have assets to do so, a judge may feel a judgement is appropriate. In doing this, the debt goes from unsecured to secured debt, which means that if you go into bankruptcy, the credit card issuer will have a claim on your assets. But can a big judgement on credit card debt force a person to file bankruptcy?
If someone built up $100k in credit card debt and then defaulted on it, and the issuer got a judgement for the full amount (including interest, late fees, etc), could the debtor have a lien on their property?
I guess a lot must depend on state law, but I don't see how a lender can legally turn totally unsecured debt into semi-secured or full recourse debt.
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