Do You Need an Attorney to File a Lien on a Business?

The process of filing a lien against a business can be frustrating because you need to follow certain procedures such as going to court and filing paperwork. For this reason, many individuals opt to use an attorney. But you don't need an attorney to file a lien. The main benefit of not using an attorney is that you save legal expenses.

Filing a Lawsuit

The process of obtaining a lien begins with filing and winning a lawsuit in civil court against the business that owes you money. You do not need an attorney to file a lawsuit but it is something to consider depending on the size of the debt and nature of your relationship with the business. You file a lawsuit as the petitioner in the county where the business is located, which sets the process in motion. The business must respond to a summons to appear in court. If it fails to do so or if the judge rules in your favor, she issues a default judgment against the business.

Disclosure of Assets

The judge usually allows the other party time to make good on the debt. If the business fails to pay within the specified time, then the next step in the process is filing a lien. The lien gives you interest in the assets of the business including its property. Filing a lien requires that you return to civil court. At this point, the court holds the business in contempt for nonpayment. The judge files paperwork to obtain a disclosure of the business' assets. This allows you to view the assets of the business. The judge decides which assets will have liens placed on them.

Filing a Lien

File a lien in the county in which the business owns property. Some counties automatically issue a lien following registration of the civil court judgment, but the practice varies across jurisdictions. A lien gives you an interest in the property of the business. If a business owns real estate, it cannot sell the property without paying off the debt it owes you first. However, you cannot force the business to sell its real estate, as this is exempt property. Nonexempt property is all other assets of the business.

Considerations

You may not have to file a lien but use it as leverage to negotiate a payment arrangement. This requires some tact. While you don't want to threaten the business with a lien outright you need to communicate to its owners the further consequences of nonpayment such as a lien or a levy. A levy allows you to remove funds from a bank account to satisfy the debt. A levy freezes the account, preventing the company from access to its money.