When you owe a creditor money, it can use several different methods to try to collect that money from you. One option that a creditor can use is a lien. A lien is a legal claim to a piece of your property that the creditor can can use to repossess your property if conditions are not fulfilled.
Lien Basics
The basic idea behind a lien is that a creditor has a legal claim against your property. If you do not repay a debt that you owe to the creditor, your property can be seized by the creditor. In some cases, the creditor may not seize the property but instead simply wait for you to sell the property before it collects. Liens can be placed on property such as a house, car or other personal property.
Voluntary Placement
In some cases, people place liens on their property voluntarily. One example of this is when individual uses a mortgage to purchase a piece of property. When a homebuyer uses a mortgage, the mortgage lender places a lien on the home. If the borrower does not pay the loan back, the lender can step in and take the property away. The lender then has the right to sell the property to recover any money that it lost on the mortgage.
Other Liens
While some liens are placed on property voluntarily, others are placed on property in less favorable circumstances. For example, if you do not pay your income taxes, the IRS can place a lien on your property. Municipalities can also place a lien on your property for failure to pay property taxes. If you have a contractor work on your house and then do not pay him for his work, the contractor can place a mechanic's lien on your home.
Removing the Lien
When a lien is placed on your property, it is possible to have it removed at some point in the future. After the lien is placed on your property, it is up to the lien holder to remove it. This means that you have to pay the full debt that you owe and meeting the other conditions that are set forth by the lien holder. At that point, you can ask the lien holder to remove it and it should be eliminated.
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