What Is a Judgment Lien Creditor?

If a creditor wins a lawsuit against you for unpaid debt, it receives an official judgment from the court. This judgment empowers the creditor to attach a lien to your assets. A creditor with a court judgment can attach a lien to any piece of property with a title, such as a home, car, boat or vacant land.

Judgment Liens

A lien is a legal claim to property you own in lieu of payment for a debt. Liens can be created in several ways, but judgment liens are always the result of a court judgment against you. A judgment creditor creates a lien against property you own by filing a copy of its judgment with the appropriate agency. The agency will vary depending upon the type of asset the creditor files a lien against.

After the agency records the judgment, the judgment creditor receives a security interest in the asset up to the amount of the debt. For example, if you owed $5,000 on a credit card and defaulted, the creditor could sue you and place a lien for $5,000 on your home.

Collecting the Debt

Judgment creditors typically do not receive payment for the lien until the debtor sells the asset. Although a lien will transfer when the property transfers, most items that have an attached title are expensive enough to require financing for the purchaser. The lien remains attached to the property -- not to the debtor. In the event a lien holder ever seizes the property, the lien's payment priority depends upon when the claim was originally filed and not on who holds it; this leaves the financing bank with a weaker claim to the asset than the judgment creditor. Banks do not want any other lien holder taking priority when financing a major purchase. Because of this, the judgment creditor must release its lien before you can sell or refinance the asset.

Releasing the Lien

Judgment creditors release their liens when the debtor pays off the judgment and any interest charges that have accrued or the court judgment loses its legal validity. A judgment loses its validity when it either expires or the debtor appeals the judgment in court and wins the appeal.

Lien Duration

State laws give judgment creditors a limited amount of time to enforce their judgment liens before the judgment itself expires. Each state's allowed enforcement period for judgment creditors varies. Once the creditor's judgment expires, the lien also expires and the debtor can have the lien released -- even if he never paid off the judgment. Creditors may continue to conduct collection activity after their court judgments expire because the debt itself remains valid until it's paid.