Credit problems can result in unforeseen consequences---higher insurance payments, restricted employment, and often, property that has been restricted by liens. Creditors often use liens to prevent you from selling property that could potentially be used to repay loans or other debts.
Creditor Liens
Most liens are placed on property by creditors who are using the property as security for a loan. Mortgages and home equity loans are examples of common liens, as are liens placed against cars for auto loans. If financial problems make it difficult for you to repay your debts, these liens can make it impossible to sell the property without the permission of the creditor. Furthermore, if you fail to repay the loan, the creditor can use the lien to take possession of the property.
Tax Liens
In addition to liens placed against property by creditors, liens may be placed against property when you fail to pay the taxes levied on the property, or assessed income taxes. Federal, state or local authorities may place liens against your property for unpaid property taxes, while federal and state revenue officials may use liens as a way to collect unpaid income taxes. You must pay your taxes, plus and penalties or interest incurred, in full to remove tax liens placed on your property.
Judgment Liens
Even if a creditor does not have a lien on your property as a way to secure a loan, they may be able to file a lien against your property when you fail to pay other debts. Creditors may sue you to recoup losses when you fail to repay your debts; if they win a judgment against you, liens may be placed against your property to prevent you from selling the property for profit without repaying your debts.
Removing Liens
Removing a lien is often contingent upon being able to repay the creditor or other party who obtained the lien any monies owed to the creditor. If financial problems make it impossible to repay the creditor in full, you may be able to make arrangements with the creditor to sell the property and use the proceeds to repay the debt, taxes owed or judgment. Don't think of selling property with liens against it without attempting to have the lien removed; not only will the purchaser be unable to secure a clear title to the property, voiding the sale, you may also find yourself in more legal trouble.
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