When you fall behind on debt payments, your creditors will typically initiate collection activities, such as calling you and sending you demand letters in an attempt to recover your past-due amounts. However, if you do not bring your accounts current or establish a repayment plan, a creditor may resort to more aggressive collection activity, including placing a lien on your personal property.
Judgment
Before a private creditor can place a lien on your personal property, it must obtain a legal judgment against you for your unpaid debt. A creditor obtains a judgment by filing a lawsuit against you, usually with your county's civil court. After giving you an opportunity to defend yourself against the lawsuit, the court will typically award a judgment to the creditor, making you legally liable for the debt. However, a judgment is not necessary for debts involving past-due taxes and child support.
Placement of Lien
After a court issues a judgment against you for a debt, it will place a lien in the judgment creditor's name on any real estate property you own. Depending on your state's laws, the creditor may also place a lien on other personal property, such as vehicles, jewelry and valuable electronics. However, some states place monetary exemptions on personal property, meaning that a judgment creditor cannot attach personal property valued below a specified threshold.
Effect of Lien
A property lien pursuant to a debt judgment gives the creditor a possessory interest in the property --- although the creditor does not own the property, its interest affects the transfer and disposal of the property. This means that you cannot sell or transfer the property until the lien is removed. A lien also gives the judgment creditor the right to liquidate the property and apply the proceeds toward payment of the judgment debt.
Removal of Lien
You may remove a lien on your personal property by paying off the judgment debt. The creditor will typically not remove a lien until you have paid the total amount of your judgment debt, including any interest, attorney's fees and court costs permitted by your state. However, filing Chapter 7 bankruptcy will also terminate most judgment property liens.
0 comments:
Post a Comment