Credit Card Debt

• In relation to a homestead exemption, the key to credit card debt is that it is unsecured. This means that the borrower does not specifically put up an asset as security, to be surrendered in the event of nonpayment. This is one of the reasons credit card borrowing carries a higher rate than some other types of borrowing.
  
  A credit card issuer, therefore, has no specific right to seize a home, as opposed to any other asset, in the event of nonpayment. This is in contrast to a mortgage that is secured against the home; for this reason a homestead exemption does not apply with mortgage defaults.
  
  

Judgment

• The only way a card issuer could even attempt to seize a home is by winning a judgment. This is a formal court declaration that the borrower has failed to make repayments and that the card issuer has the right to attempt to reclaim the money. Even in these circumstances, going after a home is usually a last resort. Given the amounts of money usually involved in credit card debts, most lenders will instead attempt to use techniques such as asking a court to seize money from a bank account or force an employer to make deductions from wages.
  
  

Equity

• If a card issuer does go after a home, it will usually only be able to target the person's equity. This is the difference between the market value of the home and the amount outstanding on any mortgages: in effect this is the proportion of the home that the person owns outright. If the card issuer was owed more than the equity amount and attempted to force a sale, it would usually find itself behind the mortgage lender when it came to getting hold of the proceeds.
  
  

Missouri Exemption

• In the event that a card issuer does go after a home in an attempt to recuperate money, the homeowner is covered by a homestead exemption. In Missouri this is $15,000, or $5,000 for a mobile home. The card issuer can, therefore, only hope to reclaim any money if the person has more than $15,000 in equity in the home.
  
  

Married Couples

• Missouri offers an additional layer of protection where a married couple owns a property in a form known as tenancy by the entirety. Missouri law presumes this to be the case unless there is a written agreement specifically stating otherwise.
  
  With tenancy by the entirety ownership, a Missouri creditor cannot attempt to seize the home over outstanding debts owed by one spouse alone rather than on a joint account.