Oftentimes people say that they fear taking out any type of debt because they will lose their house. Also, the repossession of personal assets has caused many to ask themselves if they can really lose their most important asset – their house. 

It is no doubt that losing a house to live in can be very devastating and can lead many people to the brink of insanity. Although you can get great lawyers, the process of them fighting the loss of your property can take a lot of time and expenses. However, can you lose your house over unpaid debt? 

Standing in as surety for a business or someone else

Standing in as surety for someone else to get a loan or other type of debt might ruin the credit score you have worked hard for. If the loan or debt remains unpaid, it will be your responsibility and might lead to assets being seized. 

Although they can seize different assets, it might be challenging for them to take the property you live in. It will require legal proceedings and after those long and tedious processes, they may get a right to seize the house. However, it is dependent on a few factors; if you apply for exemption, the house may be exempt from being seized. 

Mortgage debt

When you have applied for a mortgage, that is a whole different story. The house you applied for is more at risk of getting seized. However, there are a few prerequisites that need to clear before they vacate you off the property. They first need to give you a 15 day period to pay the mortgage, but they will add a fee to penalize the late payment. 

If 120 days pass by without any payment, that’s when you will lose the house and at times, it doesn’t entirely mean you are free of the debt. If the bank sells the property and the costs don’t cover the mortgage, that is when you will need to pay the remaining amount of the mortgage.

Credit card

In the case of overdue credit card balances, it doesn’t happen as it does on mortgage due amounts. There is also a long process that lenders need to go through to be able to touch any of the assets you own. For them to do so, they will need to file a lawsuit against you and when the judgment gets released, they can seize the non-exempt property you have. 

However, your house could be protected by exempting it and in that case, it won’t be able to be seized. That is why it is important to know what exemption policies apply in the state you are in.

Property taxes

Failing to pay Uncle Sam the dues may lead to two outcomes, a foreclosure or tax lien sale. In the first option, the taxing authority may sell the house under the name of selling the tax and the purchaser will have full control of the property. 

On the other hand, a tax lien sale is where the taxing authority sells the tax debt you owe. You will then be responsible for paying the debt with interest to the purchaser. However, the possibility of losing your home isn’t entirely impossible but you need to be aware of the rights you have.

Filing for bankruptcy 

When you have received the lawsuit, you can voluntarily file for bankruptcy to avoid losing the house and other assets. In that case, the lender won’t have a strong case against you and might have to go lenient on you. 

They may also choose to sell the debt you have to someone else but that doesn’t mean you are free from the debt. You are still responsible for paying the new lender who saved you from the debt you owed.