Creditors have various tools that they can use to make you repay outstanding debt. One of the tools that can be used is placing a lien on your property. Once a lien is placed on your property, the creditor doesn't necessarily have the right to sell your home or car to collect the debt.
What Is a Lien?
A judgment lien on a piece of property is simply a claim on the property by a creditor. When a judgment lien is placed on your property, it means that you can't sell the property and collect money from the sale without repaying the creditor. The judgment can even earn interest for the creditor if you don't pay off the debt in a timely manner. Liens could potentially sit on your property for years.
Voluntary Liens
In certain cases, you may place a voluntary lien on your property, such as with a car loan or a mortgage. If you allow this type of lien to be placed on your property so that you can borrow money, the creditor has the right to force the sale of the property. If you don't make payments on your loan as agreed, the creditor can take possession of the property and sell it.
Levy
Although a lien may not necessarily lead to a creditor selling your property, this is not the only measure that a creditor can take. If, after a certain amount of time, you still haven't paid your debt once a lien has been placed, the creditor could impose a levy order against you. The creditor can go back to court and get an order of levy to take your property. At that point, the creditor can legally seize your property and sell it to repay the debt.
Removing the Lien
After you have a judgment lien placed on your property, you can have it removed. The easiest way to have the judgment lien removed is to pay the debt. After you pay the debt off, the creditor files the appropriate paperwork to have the lien removed. In certain cases, you might be able to negotiate the removal of the lien if you agree to make regular payments to the creditor until the debt is paid off.
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