Question by T-REX: on a mortage free home if you default on a unsecured loan can you be forced to sell the house as payment?
I own my home free and clear and can not make payments on a unsecured loan. Can my house be taken as pay ment or can i be forced to sell it to repay the loan?
Best answer:
Answer by Bill M
Unsecured means you aren’t using your house or anything else as collateral. But if you don’t pay, the lender could sue you.
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First they would take you to court and sue you.
They can come after your cash assetts – such as savings and checking.
They can also garnish your wages.
They could put a lien on your home if the amount is large enough.
They will not force you to sell your home.
With the lien – you will not be able to sell your home unless you pay the debt upon the sale of your home.
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By the house, its a steal!
Usually on an unsecured loan the lender can only obtain a legal judgement and place a lien on your assets, not force you to sell your residence. If a judgement is secured the lien would have to be paid with interest if your house is sold. They can go after your other assets such as bank account, garnish your wages etc.
No an unsecured loan means just that. There is no collateral attached to the loan. Your house is safe. However, your credit will be destroyed if you allow the loan to fall into bad debt. If you can’t pay the loan, call the creditor and they may allow you to make interest payments only. At any rate, deal with the creditor in good faith. Just don’t sit there and not pay the loan. If they gave you the loan unsecured that means the creditor determined that you have the means and history to pay this loan. So, get on the phone and off the internet and deal with the creditor in good faith.