Legal Question in Business Law in California

The short and simple answer, suitable for most people in such a situation, is to finance the home and use the proceeds to pay off the credit card debt. However, on more careful consideration, I'd recommend that you do some serious financial planning, including figuring out how to generate regular cash income so you can avoid slipping further into debt. Maybe being a self-employed contractor isn't going to work for you. The credit card companies will eventually put liens on your property, including the home, and, a bit further down the road, will foreclose on those liens. Filing Chapter 13 and/or relying upon homestead protection might provide some partial relief, but I think the better solution is to get a low-interest first mortgage on your home, pay off the credit cards, and in the future keep expenditures within your income. That'll also require taking steps to get regular income.

Mr. Whipple is right, but his explanation skipped a couple of steps.

The credit card companies have no authority on their own to put liens on your property, garnish your earnings, etc. unless and until they get a judgment from a court. That will involve suing you. You would get notice of those suites once they've been filed, unless something goes seriously wrong. So there is very little chance the things you're worried about will happen out of the blue.

But if you just stop paying as you've described, the process will likely begin quite soon. The companies aren't just going to shrug off your balances. And your contracts with them probably say you will have to pay their legal bills if they sue you and win. That would greatly increase your debt. So would the need to pay your own lawyers.

You ask about filing for bankruptcy protection. It's not clear to me whether you would be eligible. But even if you are, it would not make your debts null and void -- especially under Chapter 13.

You should consult with debt counselors and/or bankruptcy lawyers if you think you may want to go that route. Don't just assume that you know how it will play out. You might end up much worse off that way.

Good luck.

It is odd to me that you state that there is 200k in equity in your home. If there is no loan one would think you would just state what you believe it is worth. I am unsure if there is something here or nothing.

However, a further consideration is that once a judgment is obtained and notice of that judgment is given to the Contractor's Licensing Board, your contractor's license may be suspended.

The second part of Mr. White's response assumes that you work in construction. But you might not have meant that you're that type of contractor. If you meant only that you work for others on a contract basis and not for wages or salary, then this part of his answer would not apply.