If a creditor or collection agency cannot compel you to pay past due amounts on a debt, it may file a lawsuit against you in your county for a judgment. Once a creditor or collection agency obtains a judgment against you, it obtains the legal right to try to recover the debt through freezing your bank accounts and garnishing your wages. A judgment may also allow the judgment creditor to force the sale of your home.
Certificate of Judgment
Usually the judgment creditor obtains a Certificate of Judgment after winning a judgment suit against you. A Certificate of Judgment allows the creditor to place a lien on any real estate property you own, including your home. A lien prevents you from selling or otherwise disposing of your real estate property without paying off the judgment. The lien remains until you pay off the judgment plus any interest and costs approved by the court.
Forcing Sale
If you do not pay off the judgment amount after the judgment creditor places a lien on your real estate property, the creditor may attempt to force the sale of your home. The proceeds of the sale go toward paying the judgment. However, forcing the sale of a home is an expensive option for the creditor, so it will typically use this approach after exhausting all other options to recover the debt.
Exemptions
Some states provide an exemption amount, below which a judgment creditor cannot attempt to force the sale of your home. For example, Ohio law provides a $20,200 exemption for real estate property, including a mobile home. If the value of your real estate property is less than $20,200 in Ohio, the creditor is barred from seeking recovery of the debt by forcing a home sale.
Equity
Equity in your home is an important factor that determines whether a judgment creditor will attempt to force a home sale. Your mortgage lender is the primary lien holder on your property, and courts typically favor the mortgage lender's interests over those of other lien holders. If you have little equity in your home, or if you owe more on your home than it is worth, a judgment creditor's attempt to force a sale would act against the mortgage lender's interest. However, if you have more equity in your home than the amount of the judgment, the judgment creditor may force the sale of the home without compromising the mortgage lender's interests.
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