A judgment lien is a "nonconsensual lien," or a lien that attaches to your property without your agreement. A judgment lien occurs when someone wins a lawsuit against you and then records the money judgment against your property. Learn more about how:
A judgment lien can be imposed on your property only after somebody sues you and wins a money judgment against you. In most states, the "judgment creditor," or the person or company who won, must record the judgment by filing it with the county or state.
In a few states, a judgment against you automatically creates a lien on the property you own in that county. The judgment creditor doesn't have to record the judgment to get the lien.
Most holders of unsecured debt, such as credit card balances, medical bills, and personal loans, must get a judgment before they can use more aggressive collection tactics. For instance, a creditor with a money judgment can "garnish" or seize your wages and "levy" or drain your bank account.
Creditors often use these practices before resorting to using the lien to recover property because recovering property can be more expensive. Discover what happens when a creditor sues you in court.
Almost all of your property is up for grabs. However, you might be able to protect some of it using an exemption.
Typically, judgment liens recorded in your county will attach to property you acquire later. For example, a judgment could be recorded in your county land records office even if you don't own any real estate. If you buy some real estate a few years later, you'll discover that pesky old lien is still waiting for you.
Most real estate liens expire after a certain number of years (seven to ten in most states), although many creditors can renew liens indefinitely. For more information, read How long does a creditor have to collect on a judgment against me?
You can get rid of some judgment liens in Chapter 7 bankruptcy. If you have a lien on your property and you plan to file for bankruptcy, you'll want to be sure to mention it to your bankruptcy attorney.
Because the lien won't go away automatically, your lawyer must file a motion asking the court to remove the lien. You should plan to pay an additional amount for the motion.
You'll be able to avoid the lien if it interferes with your ability to keep property protected by a bankruptcy exemption, but it doesn't go further than that. For instance, suppose your state allows you to protect $5,000 of vehicle equity.
In that case, the bankruptcy court will likely lift the lien for the $5,000. However, the creditor's lien will apply to any further equity over and above $5,000.
Also, if you don't tell your bankruptcy attorney about the lien, your lawyer likely won't know the lien exists. If you forget and get through bankruptcy with a lien on your property, don't worry—it happens rather frequently.
The bankruptcy court should let you reopen your case and allow you to file a motion addressing the judgment lien. Learn more about motions to avoid judgment liens in bankruptcy.
Although filers can handle straightforward bankruptcy cases independently, a case involving a lien is likely too complex to complete without professional help. Consider consulting with a bankruptcy attorney. Most offer a free initial consultation.
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