How to Avoid Liens

A lien is a claim that a creditor files against his debtors property to ensure that he receives payment of the debt. If the debtor fails to pay his debt, the property with an attached lien becomes collateral to cover the debt. If the property owner sells a piece of property with an attached lien, the proceeds from the sale go towards paying off the debt first. Since liens can have serious consequences, it is better to avoid them in the first place.

Instructions

1

Ask the contractor for a release of lien, also called lien waivers, before signing the final paperwork. If a house is built or remodeled and the contractor does not pay his employees or other vendors, these people could file a mechanics lien against your property, even though you already paid the contractor. A release of lien releases you from any obligations should any disputes arise. Obtain a lien release when paying construction or remodeling debt as a condition of payment.

2

Set up a payment plan with the Internal Revenue Service (IRS) if back taxes are owed to avoid a federal tax lien. The IRS is generally willing to work with individuals who owe taxes, but if you ignore your responsibility, you could face a lien against your home and other personal property.

3

Resolve and pay all mandatory fees to prevent a homeowners association from filing a homeowners lien against the home.

4

Pay credit card debt to avoid a judgment lien. Additionally, unpaid balances due to repossession and defaulted bank loans could also result in a judgment lien against the home and personal property. If behind on monthly payments, reach a payment agreement with the company before it goes to court.

5

Avoid liens through bankruptcy. If you have a lien attached to a piece of property that you are entitled to claim as exempt, you can avoid the lien under Chapter 13 and 7, but only if it is a judicial-type lien such as a garnishment or a judgment.