Impact of Foreclosure on Credit Cards

0.10 Dollars($)

Vacation Rental Investment rentals have dried up. Used up most of savings to keep paying mortgage and now property has lost 50% of value and can't sell and no rentals. If the house goes into foreclosure whether by Deed in Lieu or Foreclosure how does that affect credit cards we have - can they be taken away - balance is always paid off in full.

Niicss · Joined: 03 Oct 2005 Posts: 807 118.37 Dollars($)

Welcome Guest,

I believe the existing credit cards that you have cannot be taken away because of the foreclosure as credit card debts are unsecured debt and the mortgage is a secured debt which is backed by the property.

If you cannot pay the deficiency amount then the lender can place lien on your other assets or properties.

Let me know if you have any further questions.

larry · Joined: 27 Jun 2007 Posts: 2925 406.27 Dollars($)

Hi,

Agree with Niicss that your present credit cards should not be taken away because of foreclosure.

By that way foreclosure and deed in lieu of foreclosure is not the same thing. If your lender approves for deed in lieu then you will need not to pay the deficiency amount although the credit effect in both the cases are almost same.

Feel free to ask if you have any further questions.

gmakerley · Posted: Fri May 02, 2008 9:20 am Post subject:

credit card companies are quick of late to drastically increase interest rates once they espy negative items on their customers' credit reports.

i can't imagine them shutting you off entirely based on (what appears to be) a timeshare situation gone bad.

paying your balances monthly, as you have, will save you from that situation, anyway; as you don't pay interest now. maintain that habit and you'll not suffer.

you're in good shape, it would appear; though any derogatory reporting will have a negative impact on your credit score.

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