Is a Judgment the Same As a Lien & Which One Is Worse?

When you find yourself in debt, creditors can use a number of tactics to try to collect the balance that you owe. In this situation, you may hear the terms "judgment" and "lien" used frequently. While these terms are related to one another, they do not mean the same thing.

Getting a Judgment

A judgment is an order from a court to pay money to another individual or company. To obtain a judgment, a creditor must first file a lawsuit against you. He then will present a case against you in court. If you cannot prove that the debt was issued fraudulently, then the court will issue a judgment against you. At that point, the court essentially demands that you repay the debt.

Liens

A lien is a claim on property that is held by a creditor. Liens can be placed on property voluntarily or involuntarily. For example, one of the most common types of liens is the mortgage loan. A mortgage lender places a lien on your property when you borrow money to purchase it. If you do not repay the loan, the lender can use this legal claim to foreclose on your house. Liens also can be placed on your property if you refuse to pay a debt.

Liens vs. Judgments

Liens relate to judgments in that they can be obtained as a result of getting a judgment against a debtor. Once the judgment is obtained, a creditor can then use that judgment to obtain a lien on some of your property. For example, the creditor could use the judgment to file a lien on your home. Then when you try to sell the house, you will have to repay the debt before you can keep any of the equity.

Other Uses of Judgment

When a creditor gets a judgment against you, it does not necessarily have to result in a lien being placed on your property. Creditors can use judgments for other purposes to collect the money from you. For example, the creditor could use the judgment to garnish your wages. With this procedure, part of your paycheck is taken out and given to the creditor before you receive it. The creditor could even use the judgment to levy money out of your bank account. In some cases, you can work out a payment arrangement with the creditor to make sure that the debt is paid.