Will a Collection Agency Release a Lien?

Collection agencies collect debts for original creditors that are not secured by a debtor's assets. The company can secure the debt by filing a lawsuit and placing a lien against the debtor's home, car, boat or vacant land. A lien obtained through a lawsuit is known as a "judgment lien" and prevents the individual from selling the asset that carries the lien unless he pays off the collection debt. Judgment liens do not remain attached to an asset indefinitely.

Payment

The lien exists as a guarantee of payment. Because a judgment lien secures the collector's previously unsecured debt, the company has the right to seize your asset and sell it if you do not make payment arrangements. Once you pay off the full debt you owe to the collector, it no longer has any use for the lien since it lacks the right to seize your property. Thus, the company must release the lien and provide you with a certificate of release noting that it did so.

Time Frame

Judgments face a statute of limitations that determines their validity. A collection agency must possess a valid judgment to place a lien against your assets or use its lien to seize your assets. When the collector's judgment expires, so does its lien. The length of time a collection judgment is valid differs by state.

Overturned Judgment

You don't have to wait years for your judgment to expire to remove a collector's lien. If you have legal grounds to do so, contesting the collector's judgment with the court that originally heard the case could result in the judge overturning the court's original ruling -- costing the collection agency its judgment. When this occurs, the company must remove the lien for lack of a valid judgment. Valid reasons for contesting the original court ruling vary. If, for example, you were seriously ill or conducting business out of town on the date of the original hearing and could not attend, you can request a new hearing in order to defend yourself, overturn the collection judgment and remove the lien.

Asset Seizure

Multiple liens can attach to a single piece of property. In the event one of the lien holders seizes the asset, it must repay any lien holders whose liens were recorded prior to its own. Liens recorded afterward, however, are dissolved with the seizure. For example, when you finance a car, your lender places a lien on the vehicle until you pay off the loan. A collection agency can also place a lien on the vehicle. If the original auto lender repossesses the car, the collection agency's lien disappears. If the collection agency were to repossess the vehicle, however, it would have to pay off the remaining balance of your auto loan because the auto lender's lien was filed first. Although a foreclosure or repossession from a superior lien holder wipes away a collector's judgment lien, that does not mean that you no longer owe the collection agency. The debt is simply no longer secured by property.