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Can a Debt Collector Take Your House?

Updated on August 12, 2010

Debt collectors have the right to do a plethora of unpleasant things such as call you, track you down by calling your friends, family members, and place of employment, and even file a lawsuit against you. A successful lawsuit can grant debt collectors even more legal collection rights such as the ability to garnish your wages, levy your bank account and place a property lien against your home.

If a debt collector has threatened to take your home, breathe easy. Although it is technically possible for a collection agency to initiate a debt foreclosure in some states, it is rarely in the best financial interests of a debt collection agency to do so. 

The Debt Foreclosure Process

Before a collection agency can even begin to start thinking about taking an individual’s home, it must sue the individual and win. Any time a debt collector files a lawsuit against a debtor, it does so in the hope that the debtor will not respond to the summons and a default judgment will be issued. Default judgments have become so common that many collection agencies don’t even bother to send representation to court when they sue. Rather, they just count on the debtor not showing up.

If you respond to the summons and make it clear that you have every intention of fighting the lawsuit, the collection agency is likely to drop the case altogether - especially if the cost of paying an attorney is more than the amount you supposedly owe. Debt collectors don’t have the best track record for winning lawsuits if the debtor responds. If the debtor shows up with a qualified attorney, its rare that the debt collector can secure a successful judgment.

If it does, however, it has the right to place a properly lien on your house in 41 states. A property lien merely gives a debt collector the right to be paid if you happen to sell your home before the property lien expires (typically in 10 years). A handful of states, such as Florida, allow private creditors such as debt collectors to push a property into debt foreclosure if they hold a property lien against the home.

A Debt Collector Isn’t Likely to Take Your Home

Even if a debt collector could place a property lien and force you into debt foreclosure in your state, that does not mean that it will. A home and debt would have to meet certain criteria before it was in the best financial interests of the collection agency to even attempt a debt foreclosure.

The debt would have to be high. A collection agency has to pay for representatives to take care of every step of the process. Even if that cost can be passed on to the debtor later, that is always iffy.

The home would have to have plenty of equity. Otherwise, the home would be foreclosed on and the mortgage lender would get paid but the collection agency would get nothing - even if it were the one to initiate the foreclosure over unpaid debt.

The state of the economy has caused home values to plummet. Less people are also paying collection agencies. This makes pursuing you and your home a greater financial risk with less chance of a return.

Unfortunately, a debt collector threatening to take your house is nothing new. Although threats by debt collectors are strictly prohibited by the FDCPA, that does not stop them from occurring. The next time a debt collector threatens to place a property lien on your home and pursue a debt foreclosure, tell him you’ll see him in court and hang up the phone.

Disclaimer: I am not an attorney and this is not to be taken as legal advice. See a licensed attorney in your state for guidance specific to your situation.


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      Tony Quart 11 months ago

      Thank you. This is a really useful information. I am agree that we should not be afraid of their threat of taking your house. My father has dealt with these collectors once just several months ago. He knew that in the end, collectors will file a lawsuit against him. He then hire a lawyer from and decided to counter-sue the collection agency because of their phone harassment. In the end, my father received few hundreds bucks from the collection agency.

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      TampaDude 3 years ago

      You said, "A handful of states, such as Florida, allow private creditors such as debt collectors to push a property into debt foreclosure if they hold a property lien against the home."

      While that may be true, the Florida Constitution allows a person's primary residence to be declared as homestead and exempt from any liens, attachments or foreclosure actions, except by a mortgage holder. A credit card debt cannot be attached to a homestead property, period, so the "debt foreclosure" thing is moot.

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      Ali 4 years ago

      I guess that's one of the perks of California life, you get to pay more for certain items than evnryoee else does.My Target's DCUC went from 10.99 to 11.89, WM has them for 12.97 now that they finally have them. I think they have the MU-SW 2pks for 12.97, too. I don't recall seeing any when I ran into StL least you found a ParaDemon. Yesterday, I found 2 G.Ghosts at one Target, passed without any others to be had, and then Adam and Guardian at a TRU, which neither really impressed me enough to buy them without the rest of the wave. Maybe because they were simply new heads on re-used bodies? These were the first DCUC 8-9 I have seen, btw.

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      Sunitha 4 years ago

      I'm also an avid collector of books, a bibihoplile if you will. Lately I've had to cut my collection in half to accommodate my cross-country move into a one bedroom apartment with my boyfriend. But that just gives me more reason to buy new books there. My favorite ones are "The Aeniad" in Latin, an 1890 edition of "Alice in Wonderland" with Tenniel's illustrations, of course, and the copy of "Princess Bride" my dad gave to me when I was little. And I agree, peeking at other people's collections is so much fun.

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      ree 5 years ago

      A debt collector sued me in court over a four year debt despite me being unemployed and house note behind by four months, judge never even looked at my eveidence just ruled for the lawyer representing the collection agaency that bought the old debt for pennies on the dollar, I am going to appeal

    • Edward C. profile image

      Edward C. 7 years ago from Florida

      That's all we can really do is spread the awareness. Its good to know there are other people out there doing the same. Drop me a link to your site when you're finished. I'd love to see it.

    • eculligan profile image

      eculligan 7 years ago

      Great Hub! I am creating a website to help people who are in debt. This is very informative and useful. A debt collector can't really do anything until he sues you. They better sue you before the statue of limitations is up on the debt as well, correct.