Expert: Michael Brotherton - 11/15/2008

Question
I live in Arizona, my wife and I have approx. 75k credit card debt, can personal property be taken if we default on these accounts?  What consequences could we see as a result of default.   thanks ,   desperate and broke.

Answer
Whether certain personal property can be taken is dependant on the type of property you own and whether the creditor has knowledge of that property.

If you default and a creditor files suit  and obtains judgement they may go after real estate, bank accounts, wages, investments, and if you own a vehicle free and clear they may levy against that vehicle. If they have knowledge of other property of value they potentially could levy against that property but this is rare since most creditors do not have knowledge of property beyond what is recorded with the county, i.e. real estate and vehicles. Most personal property is private and their is no public record.

An exception would be if the creditor asks the courts for a debtor's exam where they ask you questions under oath about your assets and income. Although bank accounts and investments are private they may ask you to divulge this information through the debtor's exam and attempt to levy the accounts as well.

Most states have exemptions on certain property which means they cannot take certain assets such as furnishings, appliances, TVs etc. You may also exempt a portion of any money in a bank account and equity in your vehicle so for the most part these items are safe. If someone files suit and attempts to attach your bank account you may file an exemption with the courts to protect your property.

You will usually have plenty of notice before a creditor will take this kind of action so try not to panic before you see things headed that way. Look for other options to protect your home, your job, and your paycheck. Don't let creditors get that far. it could put your family at risk. Concentrate on finding solutions to the debt issue such as finding other sources of income and start paying down that debt, Where there is a will there is a way.