What Is a Judgment Lien?

A judgment lien is a "nonconsensual 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. This article explains how a creditor gets a judgment lien, a creditor attaches the judgment lien to property, and bankruptcy can get rid of a judgment lien.

You might also want to learn about lien basics, whether you should hire a lawyer if a creditor sues you, and whether pending lawsuits are eliminated in bankruptcy.

How Is a Judgment Lien Created?

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.

Types of Property a Judgment Lien Can Attach To

Almost all of your property is up for grabs. However, you might be able to protect some of it using an exemption.

• Judgment liens on real estate. A judgment lien affects real estate you own in the county where the creditor records the lien or where the court enters the judgment. Selling real estate can be expensive, and a creditor won't pursue this avenue unless you have significant equity in the property. The creditor will only receive the amount remaining after paying off mortgages (and other earlier-in-time liens) and sales costs.
• Judgment liens on personal property. In many states, a judgment lien also applies to your "personal property" or property other than real estate. However, judgment liens on personal property are generally ineffective unless it's especially valuable. Why? Most personal property can be protected with an exemption that allows the owner to keep it or isn't worth enough to justify the costs of obtaining it. Also, many creditors don't record personal property liens—although some get recorded with the Secretary of State—so it's relatively easy to sell it to a third party who has no idea that the lien existed.
• Judgment liens on vehicles. A judgment creditor can also file a judgment with your state motor vehicles department to get a judgment lien on any car, truck, motorcycle, or other motor vehicle you own.

Judgment Liens Can Attach to Later Acquired Property

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 several years (seven to ten in most states), although many creditors can renew liens indefinitely. Learn more by reading answers to common debt collection questions.

Avoiding Judgment Liens in Bankruptcy

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.

How a Motion to Avoid a Judgment Lien in Bankruptcy Works

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.

If You Forget to Tell Your Bankruptcy Lawyer About the Lien

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.

Consult With a Bankruptcy Lawyer

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.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.