What is a judgment lien?

A judgment lien is a court order that lets a creditor take back a debtor’s property if they don’t pay their debts. A creditor can put this hold on a person or a company, giving them the right to take assets like the debtor’s business, personal property, and real estate to pay off the debt.

How Judgment Lien Work

They can sue you for the rest if you don’t pay what you owe. The creditor can put a judgment lien on your property if the court rules against you. A judgment lien differs from other liens because it is put on property without the owner’s permission.

What do a judgment creditor and a judgment debtor mean? A judgment creditor is someone who wins a case and gets a judgment.

Most of the time, the judgment collector has to file the lien with the county or state. If a court rules against bankruptcy in some states, that person instantly gets a lien on any property they own in that county.

When a judgment lien is made with the right people, it is connected to the debtor’s real or personal property. “Personal property” refers to things like cars, tools, and furniture. On the other hand, real property includes land, homes, and other buildings.

Since the property has to be listed in the debtor’s name, the judgment lien can’t be put on their spouse’s property if they don’t pay their debt. If they don’t own anything when the lien is filed, it can be connected to any property they buy in the future, as long as the lien doesn’t end before then.

Liens on personal property can make much of someone’s property without title, which is not ideal. Because of this, liens are not publicly listed against that property, and it could be sold to someone else who doesn’t know about the lien.

Note

Experian, a credit collector, says that judgment liens do not show up on people} ‘s credit records.

What Debtors Can Do

One can pay off a lien or get out of paying it totally in a few different ways. The first and most apparent choice is to pay back the loan. The collector will take off the lien if they pay off their debt. To do this, you must file a release with the county or state where the lien was entered.

If the following are true, you may also be able to avoid a nonconsensual judgment lien on a property or car while you are bankrupt:

The lien must have come from a money ruling from a court.

The person who has a ruling against them must be able to claim relief for at least some of the property’s value.

If the house or car were sold, the lien would cause some or all of this protected equity to be lost.

For the bankrupt, lien prevention can be helpful if and when it’s possible. This can be especially helpful if a lien can be erased, but it can still be useful if only a portion of the lien can be erased.

Examples of Judgment Liens

People who hurt someone else or their property in an accident because of carelessness can file a lawsuit for damages. Another option is to put a judgment lien on the careless person’s property if their insurance doesn’t cover the hurt person’s needed repairs. By putting this judgment lien in place, the claim will be paid. The judgment collector can take further action for those who don’t pay. Some of these could be seeking execution of the ruling by taking money out of bank accounts and garnishing pay.

Here’s one more example. If someone doesn’t repay a car loan, a judge can put a lien on their car. In this case, the customer would lose the car if they didn’t pay the creditor by a specific date. Whoever owes money is responsible for paying it back. This works just as well for trucks, motorbikes, and other cars.

Liens for judgments vs. Liens for property

Property liens are not the same as judgment liens in that the seller does not have to agree. The person who owes money agrees to these liens and gives up the right to their property. In contrast to judgment liens, property liens are agreements that both parties agree to. Lenders may want some protection or collateral if you borrow a lot of money, like a house or a car.

If so, the collector could put a lien on your home or car. This lets the lender know it can take back the property if you don’t repay the loan.

What is a Statutory Lien?

A type of lien called a statutory lien is based on laws rather than common law or a contract.

Legal Information Institute at Cornell University Law School. “Statutory Lien.”Tax liens and mechanic’s liens are two common types of liens.

What is a mechanic’s lien?

A mechanic’s lien is a common type of lien for building jobs. A builder can put a lien on a building until the owner pays for the work.

What does a tax lien mean?

A tax lien is a type that the federal, state, or local government puts on a person or business because they haven’t paid their taxes. The IRS says, “The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets.” If you pay off the bill, the IRS says it will remove its lien within 30 days.

In Short

Courts use judgment bonds to get people who owe money to pay their creditors. If possible, a bankrupt should pay off their bill when they get a judgment lien.

Conclusion

• A judgment lien is a court order that lets a creditor take back a debtor’s property if they don’t pay their debts.
• When judgment liens are put on property without the owner’s permission, they are called “nonconsensual.”
• You can put these liens on real or personal property or on things the debtor will buy in the future if they don’t have any at the time of the ruling.