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JamesSmith

what might be the possible repercussions of defaulting on a credit card that's at the same bank as your mortgage?

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Hi all,

 

What might be the possible repercussions of defaulting on a credit card that's at the same bank (Chase) as your mortgage in Arizona?

 

tonyfalcon

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Hi all,

 

What might be the possible repercussions of defaulting on a credit card that's at the same bank (Chase) as your mortgage in Arizona?

 

tonyfalcon

 

The mortgage isn't the issue if you are current on that.  If you have checking/savings accounts at the same bank as the CC there usually is language to the "right to set off" which means they could use bank account assets to cure the default by the right of set off.  If they were to sue you the mortgage would not be affected but they could create a lien on the property which would prevent sale or refinancing of the home until it is cured.  

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The mortgage isn't the issue if you are current on that.  If you have checking/savings accounts at the same bank as the CC there usually is language to the "right to set off" which means they could use bank account assets to cure the default by the right of set off.  If they were to sue you the mortgage would not be affected but they could create a lien on the property which would prevent sale or refinancing of the home until it is cured.  

 

It's against Federal Law to sett off credit cards against bank balances - refrain from giving this advice in the future.  The law is Federal Reserve Board Regulation Z Section 226.12(d).  If your credit card is secured by a security interest, that is different.  Most are not. 

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ok, thanks.

 

I've done way more research on the subject of Credit Card delinquencies than most would reasonably expect but i wasn't able to find an answer to this question. So, many thanks!

 

BTW. Why wouldn't the statutory 'Homestead Exemption' (in or out of BK) protect against a lien in this case?

 

tonyfalcon

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We had that issue with WF. They had access to everything, including direct deposit, yet still sold our CC account as junk with no documentation.

 

Thank you, that's very interesting. You would think being as they were the same bank they could tap into some Mortgage funds or other. Maybe their hands are tied, legally speaking?

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Thank you, that's very interesting. You would think being as they were the same bank they could tap into some Mortgage funds or other. Maybe their hands are tied, legally speaking?

 

No, there are no mortgage "funds" and it would be illegal to divert your mortgage payment to satisfy a different debt.  The money you borrowed in the mortgage purchased the house it no longer exists as a "fund."  The bank cannot force you to use equity in the home to pay the CC debt by automatically withdrawing it.  You would have to take out a home equity loan and use that to pay the debt but even that would be you choosing to do that not the bank simply doing it on their own accord.

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  You would have to take out a home equity loan and use that to pay the debt but even that would be you choosing to do that not the bank simply doing it on their own accord.

 

Thanks very much,

 

I have considered taking out a home equity loan but i don't think now's the time as my credit score is down to 570

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