Question: Last year I defaulted on two credit cards because I was having difficulty keeping up with the payments. The accounts were turned over to a collection agency, which has threatened me with a lawsuit. I own my home jointly with my wife by the entirety, and my wife has nothing to do with the credit cards. They are in my name. If there is a judgment against me, could they place a lien against our property?

Ric: No. But if you have other assets in your name only, they can try to collect money that way.

This is why credit card interest rates are so high. You borrow from the lender, but the lender has no collateral; it can’t seize your house or other assets. The best a lender can do is ask a judge for help.

Auto loans feature lower rates because the car is collateral; if you don’t make the payments, the lender can repossess the car.

The mortgage on your house offers the lowest rate of all because the lender can foreclose, taking the house from you. And lenders always know where the house is (unlike cars), making it much easier for them to repossess.

If you are struggling to pay your debts, contact the National Foundation for Credit Counseling ( for help.

I would add that if you have assets — and it’s evident you do because you mentioned owning your house — stiffing the creditor is not ethical. You promised to repay the debt, and you should honor your obligation.